Overview of the Indian Stock Market
INDIAN STOCK MARKETINVESTMENTFEATURED
The Indian stock market is seen as a promising investment destination, as the country is one of the fastest growing economies in the world . Foreign institutional investors (FIIs) closely monitor the Indian stock market . Overall, the Indian stock market provides ample opportunities for both domestic and foreign investors to grow their wealth.
Overview of the Indian Stock Market
Key Highlights:
India has two major stock exchanges - the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Both exchanges operate under the regulatory oversight of the Securities and Exchange Board of India (SEBI).
The Indian stock market has seen significant growth and development over the years. As of 2024, the market capitalization of the BSE and NSE combined is over $4 trillion.
Historically, only about 3-6% of India's population has invested directly in the stock market, compared to over 27% in the US and 10% in China. However, this percentage has been steadily increasing in recent years.
The Indian stock market is known to be volatile, with bear markets occurring roughly once every 3 years on average, similar to the US market.
Retail investors make up a significant portion of trading activity, but studies show that around 89% of individual stock traders in the equity Futures & Options segment incurred losses in 2021-22.
Household savings in India are still predominantly in bank deposits, insurance, and other traditional savings instruments, with less than 1% going into direct equities.
Indian Stock Exchanges:
The two main stock exchanges in India are:
Bombay Stock Exchange (BSE): Established in 1875, the BSE is the oldest stock exchange in Asia. It has around 5,000 companies listed on it.
National Stock Exchange (NSE): Established in 1992, the NSE was set up to bring more transparency and competition to the Indian stock market. It has around 2,000 companies listed. The NSE's NIFTY 50 index is widely tracked globally.
Both exchanges operate through an electronic limit order book system, where orders are automatically matched. Trading takes place from 9:15 AM to 3:30 PM on all working days.
Regulation and Oversight:
The Indian stock market is regulated by the Securities and Exchange Board of India (SEBI), which was established in 1992. SEBI is responsible for framing rules, regulations and guidelines for the exchanges and market participants.
SEBI has the authority to impose penalties and take action against any exchange or market participant that violates its rules.
Investment Trends:
Historically, only about 3-6% of India's population has invested directly in the stock market, compared to over 27% in the US and 10% in China.
However, the number of retail investors has been steadily increasing, reaching around 60 million as of 2018.
Mutual funds have also seen growing popularity, attracting around 6% of household savings in FY2023. However, direct equity investments still account for less than 1% of household savings.
Studies show that around 89% of individual stock traders in the equity Futures & Options segment incurred losses in 2021-22, highlighting the risks involved.
The Indian stock market is known to be volatile, with bear markets occurring roughly once every 3 years on average, similar to the US market.
In summary, the Indian stock market has seen significant growth and development, but retail participation and direct equity investments remain relatively low compared to other major economies. The market is regulated by SEBI and has two main exchanges - the BSE and NSE.