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Indian Stock Market

An Introduction to the Indian Stock Market

The Indian Stock Market, also known as the Indian Equity Market, is the third biggest in Asia after China and Hong Kong. There are a number of exchanges in India; however the primary two exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).The BSE was formed in the year 1875 whereas the NSE is relatively new, founded in the year 1992.Trading happens in exactly the same way in both the exchanges and the trading mechanism that is followed is also very similar. The trading house and the settlement process of both the exchanges are the same.Traders are allowed to trade on either of them. The NSE however has an edge over BSE in that it is very dominant in the spot trading and the derivatives market which makes trading on NSE very easy owing to the liquidity that it offers.

Trading in the Indian Stock Market

Trading in equity, in both the exchanges, follow a similar pattern. Both the exchanges allow online share trading. The equity shares are traded by matching the orders placed by investors with the best limit order. There is a lot of transparency and the buyer and the seller details remain anonymous.However, it is important to trade only on liquid stocks so that your orders get executed.Any order placed in the Indian equity market has to be placed through a broker.The Indian equity market is broadly divided into two types- Primary market and Secondary market. In the Primary market, a share is first listed in the form of an Initial Public Offering, also known as an IPO. After this the share can be traded normally i.e. it can be bought and sold on the Secondary market.Traders can trade in the Indian equity market from 0915 to 1530 hrs. The trading floor is open from Monday through Friday. It is closed on Saturdays, Sundays as well as on public holidays. Muhurat trading is followed on some public holidays like Diwali, the timing of which is communicated to the brokers and the traders in advance.

Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) is a regulatory body. All the trading activities are regulated by SEBI. They develop, regulate and supervise the stock market. Founded in the year 1992, SEBI has constantly laid down rules to make trading in the Indian Equities Market more transparent. They enjoy enormous powers to impose penalties in case of any breach.

The Average Directional Index - ADX

ADX indicates how strong the forex market is. It lets you know if the current trend of the market is strong or weak. This lets you either stay in your trade or book profit.ADX is a very useful indicator mostly used by advanced and professional chartists.

A Word of Caution!

The process of buying and selling shares in the Indian Equity Market has advanced a lot in the last few years. From paper trading to electronic trading, the Indian Stock Market has come a long way. However, as a word of caution, traders are advised to seek professional guidance and only then put their money into the equity market. The volatility and the uncertainty in the market need to be studied so that the trader does not end up losing all his capital invested in the market.