Future of Stock Market in India - PowerPoint PPT Presentation

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Future of Stock Market in India

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To understand the future of stock market in India (manishhathiramani.com), we need to understand how the stock market works. India has two big stock exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE); and most of India’s stock trading takes place in these two popular sites. The BSE is doing business since 1875 and the NSE was founded in 1992 and became fully operational in 1994. Trading companies in India do business by registering with both exchanges. Proprietary trading companies in India can also take advantage of the direct market access (DMA) option – PowerPoint PPT presentation

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Title: Future of Stock Market in India


1
Future of Stock Market in India
  • To understand the future of stock market in
    India, we need to understand how the stock market
    works. India has two big stock exchanges, the
    Bombay Stock Exchange (BSE) and the National
    Stock Exchange (NSE) and most of Indias stock
    trading takes place in these two popular sites.
    The BSE is doing business since 1875 and the NSE
    was founded in 1992 and became fully operational
    in 1994. These two stock exchanges follow the
    same trading mechanism, trading hours, settlement
    process, etc. The BSE deals with 4,700 listed
    firms (approx.), whereas the NSE has about 1,200
    listed companies. But only about 500 companies,
    out of all the listed firms on the BSE,
    constitute more than 90 of its market
    capitalization the rest on the list consists of
    highly illiquid stocks.

2
Proprietary Trading
  • Trading Mechanism
  • The open electronic limit order book is used by
    both exchanges to trade through. The order
    matching is done by the trading computer. No
    market makers or specialists are needed to match
    orders and the entire process is order-driven,
    which means that market orders placed by
    investors are automatically matched with the best
    limit orders. This facilitates privacy and
    security of both parties as buyers and sellers
    remain anonymous. This practice brings more
    transparency, by displaying all buy and sell
    orders in the trading system. However, in the
    absence of market makers, there is no guarantee
    that orders will be executed. Professionals
    involved with proprietary trading plays a vital
    role here.

3
Trading Companies in India
  • Trading companies in India do business by
    registering with both exchanges. All orders in
    the trading system need to be placed through
    brokers, who may provide online trading facility
    to retail customers. Proprietary trading
    companies in India can also take advantage of the
    direct market access (DMA) option, in which they
    use trading terminals provided by brokers for
    placing orders directly into the stock market
    trading system. The future of stock market in
    India is promising and will surely bring more
    security to investors.
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