1/20/22, 1:02 PM BSE - What is Bombay Stock Exchange?

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Bombay Stock Exchange

What is Bombay Stock

Exchange?
Bombay Stock Exchange is the oldest stock
exchange in India as well as Asia. It is an
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value at $2.2 trillion.

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BSE stock exchange was founded by
Premchand Roychand in 1875 and is currently
managed by Sethurathnam Ravi, serving as the
chairman. Stocks

National Stock Exchange

How Does It Work?
Bombay Stock Exchange

Financial transactions in BSE are done online What is SENSEX

through an electronic trading system. Market
Stock Exchange
orders can be directly placed in BSE online,
Multibagger Stocks
without the requirement of external specialists
through direct market access. Due to the Penny Stocks
absence of such limit orders, focus is shifted Stock Broker
from buyers/sellers to the total value of
Stock Trading
transactions in a day
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transactions in a day.
Nifty

Trading in the BSE share market has to be done Mid Cap Stocks

through a brokerage agency, against a
Small Cap Stocks
stipulated charge. However, direct investment
Large Cap Stocks
access is given to certain preferential investors
making large transactions in the BSE stock Blue Chip Stocks or Companies
market. BOLT-Bombay Online trading platform is Stock Market Timings
used by this stock exchange for efficient
NSE Holidays
trading.
BSE Holidays
Transactions made in BSE online are done Intraday Trading
through T+2 rolling settlement, wherein all
Equity Share Capital
transactions are processed within two days.
Securities and Exchange Board of India (SEBI) Growth Stocks

is responsible for the regulation of this stock

exchange, continuously updating rules for its Stock Market Indicies
smooth operation.
S&P BSE SENSEX

S&P BSE 100

What Are The Advantages Of Listing?
NIFTY 100
A company listed under Bombay Stock
NIFTY 50
Exchange can enjoy several benefits, such as:
NIFTY MIDCAP 100

Hassle-free capital generation  NIFTY BANK

NIFTY NEXT 50
Listed companies enjoy the trust of all kinds of
investors present in the market. It spreads
market knowledge regarding a budding
business, allowing individuals to carefully
analyse the imminent condition of such
companies and invest accordingly.

Paid up capital for a business can only be

raised effectively if a company is listed with a
prevalent stock exchange in a country.
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Market securities can be readily sold in a

financial market if it is listed in Bombay Stock
Exchange, thereby sufficing the liquidity needs
of both businesses and individual investors.
Funds to meet any requirement of a company
can be obtained through the issuance of debt
and equity securities, which investors purchase
for the purpose of wealth creation.

Securities purchased can be readily sold

through the electronic trading settlement
of BSE, thereby allowing investors to effectively
encash their investment as and when the need
arises.

Legal Supervision 

Investors can skim through fraudulent

companies if they choose to invest in
organisations listed with BSE. Several rules and
regulations are mandated by SEBI monitoring
the actions of registered companies,
minimising the chances of investors incurring a
loss due to illicit activities of a business.

Timely information display

Adequate information about total revenue

generation and reinvestment pattern have to be
published annually by all companies listed
under the BSE stock exchange. Total dividend
disbursed, bonus and transfer issues, book-to-
closure facility etc. has to be displayed as per
SEBI regulations.

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Adequate pricing rules 

Price of securities trading in BSE share

market is determined through demand and
supply of the same currently prevailing. This
reflects the real value of a share, affecting a
company’s market capitalisation and ease of
procurement of funds.

Collateral guarantee

Securities issued by a company acts as a

collateral guarantee at the time of availing
loans. Most financial institutions accept equity
shares listed in BSE as leverage against which
funds can be obtained.

What Are The Various Investment

Methods?

Trading of securities of a company listed

in Bombay Stock Exchange can be done either
directly or indirectly, depending upon the
volume of transactions undertaken. Primary
trading can be done only by registered
brokerage agencies and institutional investors
making bulk transactions in BSE.

Retail customers, on the other hand, do not

have to access to direct investment schemes
and have to make transactions through a
certified stockbroker or a stock investing
platform. This is known as secondary trading
mechanism, regulated by the Financial Industry
Regulatory Authority (FINRA). For secondary
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g y y( ) y
trading, an individual must hold a Demat
account, through which the financial
transactions take place. Virtual ownership of all
stocks can be gained through the account
itself.

Chief Investment Segments 

All companies listed under BSE can use the

following financial instruments to raise funds
for their business:

Equity – 

Equity instruments primarily consist of shares

issued by a company to raise adequate paid-up
capital for its smooth operations. Massive
equity is raised during an initial public offering
of a start-up company in the primary capital
market. However, new issuance of shares is
subject to strict regulations under SEBI, due to
volatility of prices at this stage.

Equity already issued can be traded amongst

retail customers in the secondary market
through a stockbroker.

Debt Instruments and government securities

– 

These tools are issued by an underlying

company to raise finances without giving
ownership to investors. Relatively risk-free in
nature, trading in debt instruments can be done
in both primary and secondary market,
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depending upon its nature.

Various government securities such as zero

coupon bonds, floating rate bonds, capital
indexed bonds and dated securities are traded
in BSE. 

Major Indices

Sensex is a benchmark index under BSE. It is a

free floating market-weighted index tracking the
performance of the top 30 companies. BSE
share market uses Sensex to monitor the
performance of these companies to determine
whether the capital market of India would rise
or fall, depending upon movement direction of
share prices of these companies.

Other than the benchmark index, several other

sectoral indices are also provided by BSE, such
as:

1. S&P BSE Auto

2. S&P BSE bankex

3. S&P BSE Capital Goods

4. S&P BSE Consumer Durables

5. S&P BSE Fast moving consumer goods

Indices segregating companies on the basis of

market capitalisation into small and mid-cap
companies are also launched by BSE, in the
form of BSE small-cap index and BSE mid-cap
index. These indices can be tracked by index
Mutual Funds aiming to profit from capital
appreciation of stocks of these companies
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appreciation of stocks of these companies.

Bombay Stock Exchange plays a vital role in

regulating financial markets of India. Market
fluctuations in an economy can easily be
observed through the performance of its
benchmark index, which has cascading effects
on the capital sector of economies all around
the world.

Background to the BSE

BSE has an interesting back story to it. In the

19th century, some traders, with businessman
Premchand Roychand, would gather under a
Banyan tree in current Dalal Street.  Popularly
known as the Native Share and Stockbrokers
Association, this gathering would engage in
purchasing and selling stocks. This association
later evolved into the BSE.

 Earlier, the BSE worked on a floor trading

system in which a licensed broker stands in the
ring and calls out the rising price. The investors,
who were outside the BSE, would only find out
about the stock prices in the newspapers. That
is why the NSE or the National Stock Exchange
went digital, and the prices became public to all
the investors. Consequently, the NSE became
the favorite spot for investing. 

Seeing the shift to digital, the board of BSE

decided to change their system as well. In 1995,
BSE received technological aid from CMC Ltd
and went digital. Today, the BSE trading area is
called BSE online trading.
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g

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