About Stock Market
The stock exchange is a market place to buy or sell shares(equities) of Company`s listed at an exchange. It provides a platform to buyer and seller to buy and sell the shares or stay invested in the stock of the Companies listed at the exchange. At the same time exchange works like a delivery channel for Company, buyer and seller in digital form.
Introduction about SENSEX
The two word sensitive index is abbreviated as SENSEX. The Sensex. BSE Sensex was launched on 1-Jan-1986.
The movement of the stock market is measured according to the volatility to 30 companies mapped with SENSEX. These companies are selected from different sectors of India`s economy on the basis of their strong liquid and sound financial position.
National Stock Exchange (NSE) after its incorporation in the year 1992, SEBI adapted it as stock exchange in April 1993 and commenced business in 1994.
NSE also consists of a well-diversified 50 companies index reflecting overall market conditions. Nifty 50 Index is computed using free float market capitalization method.
About Regulatory Body
The regulatory body for stock exchanges, Stock brokers, investors in India is called Security Exchange Board of India (SEBI).
SEBI was constituted as a non-statutory body on April 12, 1988 through a resolution of the Government of India. The various provisions, rules made under SEBI Act 1992 came into force w.e.f. January 30, 1992.
The basic functions of the SEBI "to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental there to"
SEBI Departments/Divisions:
A). Corporation Finance Department (CFD)
The CFD look afters the matters related to
- Issuance and listing of securities, including initial and continuous listing requirements
- corporate governance and accounting/auditing standards
- corporate restructuring through Takeovers/ buy backs
- Scheme of arrangements involving merger/ demerger, amalgamation, reduction in share capital
- Social Stock Exchange- Policy Formulation, Regulatory Supervision, Creation of eco-system etc.
- Delisting, etc.
Alternative Investment Fund and Foreign Portfolio Investors Department
Among various department SEBI has a special division called AFD i.e. Alternative Investment Fund and Foreign Portfolio Investors Department. The main function of AFD is to deal with issues related to Foreign Venture Capital Investors (FVCI), Foreign Portfolio Investors (FPI), Designated Depository Participant (DDP) and Custodians Alternative Investment Funds, Venture Capital Funds.
In today`s economic paradigm the
stock market is playing a vital role. India`s economic growth is correlated alongside the movement of the stock market. The same parameter is applicable for various other countries in the world too. As we trade through SENSEX (BSE) or National Stock Exchange (NSE), commonly known as stock exchange. And like India`s BSE & NSE other country`s major stock exchanges are known as under:-
India is a developing country hence its
stock market is considered more potential by investors of India and by foreign investors also. That`s the reason the Indian stock market is an epi centre for foreign institutional investors (FII`s) and domestic institutional investors (DII`s) as compared to various other markets.
The ministry of finance observed the trends and pattern returns from the stock market. And they decided to allow Employee provident fund organisation (EPFO) to invest in stock market under specified limit. Hence ministry issued Notification number 11/14/2013-PR dated 2nd March, 2015 and permitted to EPFO to invest their surplus into Debt Securities and Exchange Traded Funds as per prescribed pattern. Thereafter as per approval of 207th meeting of the Central Board of Trustees, EPF held on 31.03.2015, organisation has started investment in Exchange Traded Funds from August 2015 onwards.
The investment that is carried out by these organizations or institutions in the real or financial assets of a country is known as institutional investors. The domestic investors will use funds that they pool together so they can trade in the securities and assets of the country.
The shrill ups and downs in these primary 30 companies are known as bullish and bearish trends of the BSE market. The same is acknowledged as in the case of 50 companies of NSE too.
The plunge and ascent in the BSE or NSE can be seen due to various factors, such as:
- Adverse or favourable change by Govt. for the economy,
- Change in RBI policy toward effecting either side,
- Due to occurrence of war/war like situation among the countries;
- Due sharp fall or rise in international stock markets,
- Parliamentary election or sign of instability of central Govt in India. Etc.
The following exemplary data reveals the bearish trends for BSE from time to time.
Conclusion
Indian stock market is an organised and well regulated market. The reputed institutions SEBI is managing all the affairs of the market as well as it frames rules and regulations related to issuance of IPO, their listing etc. The primary object of buying and selling in the market should be with a long term horizon and before investing in the market one must consider internal and external factors affecting movement of stock markets.
Author: Anand Ballabh
2025(28)
