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National Stock Exchange of India
TypeStock exchange
LocationMumbai, Maharashtra, India
Founded27th November 1992
OwnerVarious group of domestic and global financial institutions, public and privately owned entities and individuals
Key peopleAshishkumar Chauhan
(MD & CEO)
CurrencyIndian rupee (₹)
No. of listings2,529 (July 2024)
Market cap₹463 lakh crore (US$5.5 trillion) (September 2024)
Indices
Websitewww.nseindia.com
The National Stock Exchange building in the Bandra Kurla Complex in Mumbai
Performance of NIFTY 50 index between 2000 and 2024
Performance of the NIFTY Next 50 index between 2000 and 2024

National Stock Exchange of India Limited (NSE) is one of the leading stock exchanges in India, based in Mumbai. NSE is under the ownership of various financial institutions such as banks and insurance companies. It is the world's largest derivatives exchange by number of contracts traded for the fifth consecutive year and the third largest in cash equities by number of trades for the calendar year 2023 It is the 7th largest stock exchange in the world by total market capitalization, exceeding $5 trillion on May 23, 2024. NSE's flagship index, the NIFTY 50, is a 50 stock index that is used extensively by investors in India and around the world as a barometer of the Indian capital market. The NIFTY 50 index was launched in 1996 by NSE.

NSE has over 10 Crore unique registered investors having over 20 Crore accounts.

History

National Stock Exchange was incorporated in the year 1992 to bring about transparency in the Indian equity markets. NSE was set up at the behest of the Government of India, based on the recommendations laid out by the Pherwani committee in 1991 and the blueprint was prepared by a team of five members (Ravi Narain, Raghavan Puthran, K Kumar, Chitra Sankaran and Ashishkumar Chauhan) along with R H Patil and SS Nadkarni who were deputed by IDBI in 1992. Instead of trading memberships being confined to a group of brokers, NSE ensured that anyone who was qualified, experienced, and met the minimum financial requirements was allowed to trade.

NSE commenced operations on 30 June 1994 starting with the wholesale debt market (WDM) segment and equities segment on 3 November 1994. It was the first exchange in India to introduce an electronic trading facility. Within one year of the start of its operations, the daily turnover on NSE exceeded that of the BSE.

Operations in the derivatives segment commenced on 12 June 2000. In August 2008, NSE introduced currency derivatives.

NSE EMERGE

Main article: NSE EMERGE

NSE EMERGE is NSE's new initiative for small and medium-sized enterprises (SME) and startup companies in India. These companies can get listed on NSE without an initial public offering (IPO). This platform will help SMEs and startups connect with investors and help them with the raising of funds. In August 2019, the 200th company listed on NSE's SME platform.

Markets

The National Stock Exchange of India Limited (NSE) commenced trading in derivatives with the launch of index futures on 12 June 2000. The futures and options segment of NSE has made a global mark. In the Futures and Options segment, trading in the NIFTY 50 Index, NIFTY IT index, NIFTY Bank Index, NIFTY Next 50 index, and single stock futures are available. Trading in Mini Nifty Futures & Options and Long term Options on NIFTY 50 are also available. The average daily turnover in the F&O Segment of the Exchange during the financial year April 2013 to March 2014 stood at ₹1.52236 trillion (US$18 billion). Nifty 50 is an important stock market index comprising the 50 largest publicly traded companies on the NSE in India.

On 3 May 2012, the National Stock exchange launched derivative contracts (futures and options) on FTSE 100, the widely tracked index of the UK equity stock market. This was the first of its kind index of the UK equity stock market launched in India. FTSE 100 includes the 100 of largest UK-listed blue-chip companies and has given returns of 17.8 percent on investment over three years. The index constitutes 85.6 per cent of UK's equity market cap.

On 10 January 2013, the National Stock Exchange signed a letter of intent with the Japan Exchange Group, Inc. (JPX) on preparing for the launch of NIFTY 50 Index futures, a representative stock price index of India, on the Osaka Securities Exchange Co., Ltd. (OSE), a subsidiary of JPX.

Moving forward, both parties will make preparations for the listing of yen-denominated NIFTY 50. On 13 May 2013, NSE launched India's first dedicated debt platform to provide a liquid and transparent trading platform for debt-related products.

NSE Bull

In 2024, NSE inaugurated a life-sized sculpture of the NSE Bull. The statue is flanked by sculptures of numerous people of different backgrounds.

Market statistics

  • Earlier, the Bimal Jalan Committee report estimated that barely 3% of India's population invested in the stock market, as compared to 27% in the United States and 10% in China.
  • The Economic Times estimates that as of April 2018, 6 crore (60 million) retail investors had invested their savings in stocks in India, either through direct purchases of equities or through mutual funds.
  • Morgan Stanley has noted that the Indian stocks have been through four bear markets in 25 years, or since foreign investors became actively involved with Indian equities. The Economic Times estimate that the Indian stock market sees a bear market on average once every 3 years, similar to the US market. It uses the Nifty 50 index as a reference point and identifies eight 20% drops in the last 25 years.
  • According to SEBI, during FY 2022–23, 73% of mutual fund units were redeemed within 2 years of investment. Only investments in 3% of the units continued for more than 5 years.
  • Another study conducted by the SEBI, approximately 89% of individual stock traders in the equity Futures & Options (F&O) segment incurred losses during the financial year 2021-22.
  • According to 2019 SEBI report, "more than 95% Indian households prefer to park their money in bank deposits, while less than 10% opt for investing in mutual funds or stocks. The survey, conducted across urban and rural areas of the country, showed that life insurance was second most preferred investment vehicle, followed by precious metals, post office savings and real estate in the top-five."

Stakeholders

The key domestic investors which hold a stake in NSE include Life Insurance Corporation, State Bank of India, India Infoline Limited and Stock Holding Corporation of India Limited. Key global investors include Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited, Veracity Investments Limited, Crown Capital Limited and PI Opportunities Fund I.

Subsidiaries

  • NSE Indices Limited
  • NSE Clearing Limited
  • NSE NSEIT
  • NSE Infotech Services Limited
  • NSE Cogencis Information Services Ltd
  • NSE IFSC Clearing Corporation Limited (NICCL), or simply NSE International Clearing
  • NSE IFSC Limited, or simply NSE International Exchange
  • NSE Investments Limited
  • NSE Data & Analytics
  • NSE Academy Limited

Financial literacy

NSE has collaborated with several universities like Gokhale Institute of Politics & Economics (GIPE) - Pune, Bharati Vidyapeeth Deemed University (BVDU) - Pune, Guru Gobind Singh Indraprastha University - Delhi, RV University - Bangalore, the Ravenshaw University of Cuttack and Punjabi University - Patiala, among others to offer MBA and BBA courses. NSE has also provided mock market simulation software called NSE Learn to Trade (NLT) to develop investment, trading, and portfolio management skills among the students. The simulation software is very similar to the software currently being used by the market professionals and helps students to learn how to trade in the markets. NSE also conducts online examinations and awards certification, under its Certification in Financial Markets (NCFM) programs. NSE has set up NSE Academy Limited to further financial literacy.

At present, certifications are available in 46 modules, covering different sectors of financial and capital markets, both at the beginner and advanced levels. The list of various modules can be found at the official site of NSE India. In addition, since August 2009, it has offered a short-term course called NSE Certified Capital Market Professional (NCCMP).

Criticism and controversies

This section needs expansion. You can help by making an edit requestadding to it . (January 2024)

Market manipulation

See also: 1992 Indian stock market scam, Harshad Mehta, and Ketan Parekh

The Indian stock exchanges BSE and NSE have witnessed several corruption scandals. At times, the Securities and Exchange Board of India (SEBI) has barred several individuals and entities from trading on the exchanges for stock manipulation, especially in illiquid smallcaps and penny stocks.

Market operators illegal activity

Market operators continue to operate in the Indian stock market, albeit within a regulatory framework aimed at ensuring transparency and fairness. Market operators are individuals or entities that actively engage in buying and selling securities to influence their prices for profit. They operate through various strategies, such as arbitrage, short selling, high-frequency trading, front running, churning, scalping, wash trading, spoofing, and layering, often leveraging sophisticated technology and large capital. Regulatory bodies like the Securities and Exchange Board of India (SEBI) oversee market activities to curb malpractices such as insider trading, price rigging, and market manipulation. SEBI has implemented measures, including surveillance systems, to detect and penalize unethical practices. Despite these regulations, market operators exploit loopholes to gain an edge, necessitating continuous vigilance and regulatory updates. Market operators in India often use the "pump and dump" strategy, despite strict regulations against such practices. The "pump and dump" scheme involves artificially inflating the price of a stock (pump) through false or misleading positive statements. Once the price has been significantly raised, the operators then sell off their holdings (dump) at the inflated prices, leading to a sharp price decline and substantial losses for other investors who bought in at the higher prices. Their activities have continued to impact market volatility, liquidity, and price discovery, playing a significant role in the dynamics of the Indian stock market.

NSE co-location scam

Main article: NSE co-location scam

On 8 July 2015, Sucheta Dalal wrote an article on Moneylife alleging that some NSE employees were leaking sensitive data related to high-frequency trading or co-location servers to a select set of market participants so that they could trade faster than their competitors. NSE alleged defamation in the article by Moneylife. On 22 July 2015, NSE filed a ₹1 billion (US$12 million) suit against the publication. However, on 9 September 2015, the Bombay High Court dismissed the case and fined NSE ₹5 million (US$60,000) in this defamation case against Moneylife. The High Court asked NSE to pay ₹150,000 (US$1,800) to each journalist Debashis Basu and Sucheta Dalal and the remaining ₹4.7 million (US$56,000) to two hospitals. The Bombay High Court has stayed the order on costs for a period of two weeks, pending the hearing of the appeal filed by NSE.

The board also passed orders against 16 individuals including former managing directors and CEOs Ravi Narain and Chitra Ramakrishna ordering them to disgorge 25% of their salaries during that period along with interest. All money is to be paid into the Investor protection and education fund. These individuals have also been debarred from the markets or holding any position in a listed company for a period of five years.

In 2024, SEBI dropped the case.

See also

Notes

  1. Based on the statistics maintained by Futures Industry Association (FIA), a derivatives trade body
  2. As per the statistics maintained by the World Federation of Exchanges (WFE)

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Further reading

  • Rawlin, R. (2011). Multivariate Analysis to Get an Estimate of the Indian Stock Market Nifty Index. GRIN Verlag. ISBN 978-3-6560-6385-8.
  • The Indian Financial System: Markets, Institutions And Services, 2/E. Pearson Education. 2007. ISBN 978-8-1775-8562-9.
  • Ramona Birău and Jatin Trivedi (2015). "Estimating Long-term Volatility on National Stock Exchange of India". Procedia Economics and Finance. 32: 574–579. doi:10.1016/S2212-5671(15)01434-3. ISSN 2212-5671.
  • Ganeshaiah, K. N. “Has the Behaviour of the Stock Market Been Affected by the Scam? — A Statistical Analysis.” Current Science 63, no. 7 (1992): 345–47. JSTOR 24095453.
  • D., Sumathi, Stock Price Volatility in National Stock Exchange of India (2018). International Journal of Research in Economics and Social Sciences (IJRESS), December 2018, Available at SSRN 3319625
  • Kumar, G. and Misra, A.K. (2020), "Long run commonality in Indian stocks: empirical evidence from national stock exchange of India", Journal of Indian Business Research, Vol. 12 No. 4, pp. 441-458. doi:10.1108/JIBR-09-2016-0091
  • Basu, D. and Dalal, S. (1993). The Scam: Who Won, who Lost, who Got Away. UBS Publishers' Distributors. ISBN 978-8-1859-4410-4. LCCN 93902443.{{cite book}}: CS1 maint: multiple names: authors list (link)
  • Nair, S. (2021). Bulls, Bears and Other Beasts (5th Anniversary Edition): A Story of the Indian Stock Market. Pan Macmillan. ISBN 978-9-3907-4257-8.
  • Goel, A., Tripathi, V. and Agarwal, M. (2021), "Market microstructure: a comparative study of Bombay stock exchange and national stock exchange", Journal of Advances in Management Research, Vol. 18 No. 3, pp. 414-442. doi:10.1108/JAMR-06-2020-0109

External links

19°3′37″N 72°51′35″E / 19.06028°N 72.85972°E / 19.06028; 72.85972 (National Stock Exchange)

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  7.  China Shenzhen Stock Exchange
  8.  India Bombay Stock Exchange
  9.  India National Stock Exchange of India
  10.  Canada Toronto Stock Exchange
  11.  United Kingdom London Stock Exchange
  12.  Saudi Arabia Saudi Exchange
  13.  Taiwan Taiwan Stock Exchange
  14.  Germany Deutsche Börse
  15.  SwedenDenmarkFinlandIcelandEstoniaLatviaLithuania Nasdaq Nordic
  16.  Switzerland SIX Swiss Exchange
  17.  South Korea Korea Exchange
  18.  Australia Australian Securities Exchange
  19.  Spain BME Spanish Exchanges
  20.  South Africa JSE Limited
  21.  Indonesia Indonesia Stock Exchange
  22.  Brazil B3
  23.  Singapore Singapore Exchange
  24.  Russia Moscow Exchange
  25.  Thailand Stock Exchange of Thailand
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