Stock Market in India

Stock Market in India: The Indian stock market is a complex place where risk and return go hand in hand. The higher the risk, the higher the return of the individual. The Indian stock market is operated through two stock exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has been in action since 1875, and the NSE was established in the year 1992, but it
started stock trading in 1994.

Almost all big companies in the Indian stock market are listed on these two stock exchanges.
This means that these companies use these platforms to trade their stocks. Stock trading
revolves around the buying and selling of stocks on an exchange. The transactions go through
open electronic order books, with orders matched through trading computers. Advantages of
stock trading through an online and order-based system include higher transparency and better
trust on the part of investors.

Settlement and Trading hours in Stock Market

The equity stock markets usually take a T+2 rolling settlement, which means a stock trading
which has taken place on Monday will be settled on Wednesday. Moreover, all the trading on the
stock exchange takes place between 9:55 A.M to 3.30 P.M from Monday to Friday.

Market regulation

The Securities and Exchange Board of India (SEBI) governs the overall stock market. SEBI is
entrusted with the responsibility to develop, regulate and supervise every activity in the Indian
stock market. This is an independent authority, and it has established in the year 1992. This body
has continuously tried to implement rules and regulations to improve stock market operations,
increase transparency, and enhance investors’ confidence in the stock market.

Stock Market Indexes

There are two specific market indexes available for stock trading in the Indian stock market.
These are the Nifty and the Sensex. Sensex is known to be the oldest stock index, including the
shares of 30 companies listed on the BSE stock exchange. There is another index in the name of
Standard and Poor’s CNX Nifty, which includes the shares of 50 companies listed in the NIFTY.

Foreign investments

There are foreign investments that are also allowed in India. There are two ways foreign
investments are classified: foreign portfolio investment and foreign direct investment. Day-to-
day stock trading of foreign companies is called FDI, whereas investment in sharing without
gaining any control over the company’s management is called FPI. However, an investor
wanting to make a portfolio can be registered as a foreign institutional investor (FII). A foreign
investor wanting to indulge in stock trading can opt for mutual funds, pension funds, sovereign
wealth funds, asset management companies, insurance companies, banks, endowments, etc.
On the other hand, foreign entities can also engage in stock trading with the help of institutional
investors. There are many offshore instruments through which investments can be made. Some
of these offshore instruments include participatory notes, depository receipts, global depository
receipts (GDRs), American Depository receipts (ADRs) and others. Retail investors can invest in
ETFs and ETNs.

Also read: What is share market

High-performance stock in India

The list of high-performance stocks in India changes frequently. Also, it depends on many
factors, such as the company’s performance, external market risks, the economic condition of
India, the overall economic condition of the world, and others. There are other factors also which
affect the stock trading of investors. However, the high-performance stocks in India where
investors can put their money include TCS, HDFC Bank, Infosys, Tata Motors and others.
However, these listings may change when an investor sees the list.

Risk and Return in the Indian Stock Market

At the time of stock trading, an investor needs to be careful about the risks. In every stock
market, including the Indian stock market, there is a positive relationship between risk and
reward. If an investment has higher risks, then there is a high chance that it will also give high
returns. Some of the risks an investor needs to consider include the following:

● Market risks
● Liquidity risks
● Company-specific risks
● Risks of fluctuating performance, based on factors of an external nature. These include
geopolitical events and regulatory changes.
● Unforeseen events like the COVID-19 pandemic and others.

However, it is the responsibility of the investors to analyse each of these risks before deciding to
indulge in stock trading. Three different kinds of investors are available: risk lover, risk neutral
and risk averse. You must decide which kind of investor you are before starting stock trading.
Investors can take the help of stock experts before they invest their money. However, having
proper knowledge about all the latest trends and performance of the companies in the stock
market may also be useful for trading in the stocks in the Indian stock market.