BSE - Bombay Stock Exchange: Advantages & Various Investment Methods | Espresso

What is the Bombay Stock Exchange?

Stock exchanges are integral to the functioning of stock markets in India. They are platforms that allow companies to list their shares for being traded in the market. While there are many stock exchanges in India, the Bombay Stock Exchange or BSE stands out as the oldest and one of the most trusted ones in the country.

 

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In this article, we will talk about the Bombay Stock Exchange and look at some essential features of the exchange.

BSE India

The Bombay Stock Exchange was the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. While it was founded in 1875 by Premchand Roychand, it has evolved into one of the largest stock exchanges in the world.

Here is a quick look at the history of BSE India:

  • In the 1850s, some stockbrokers started trading under a banyan tree near Horniman Circle, Mumbai
  • They changed locations and found a permanent one in 1874. Subsequently, they established The Native Share & Stock Brokers Association in 1875. This exchange eventually came to be known as the Bombay Stock Exchange.
  • The exchange operated out of a building near Town Hall until 1928 and moved into a new building near Horniman Circle in 1930
  • In 1957, BSEIndia became the first officially recognized stock exchange in the country.
  • In 1986, the BSE launched the S&P BSE Sensex Index to measure the overall performance of the exchange
  • In 1995, the BSE switched to an electronic trading system – BSE Online via its BSE On-Line Trading (BOLT) system
  • In 2000, the Bombay Stock Exchange opened its derivatives market
  • In 2012, BSE became a Partner Exchange of the United Nations Sustainable Stock Exchange initiative
  • In 2016, BSE India launched the first International Exchange of India – India INX

How does BSE India work?

BSE India uses an electronic system for accepting and executing trades. Investors can place orders directly in BSE Online by choosing the type of order based on their preference. However, transactions in BSE Online have to be entered via a registered stockbroker only.

While the Bombay Stock Exchange might offer direct access to some large-ticket preferential investors, all others have to go through a stockbroker. All transactions are settled within T+2 trading days as per the guidelines of the regulator, the Securities and Exchange Board of India (SEBI).

What do you mean by listing in BSE India?

When a company wants to raise capital for its business by issuing shares, bonds, or any other securities, it creates them in the primary market. An Initial Public Offer (IPO) is an example of a primary market where a company issues shares to the public for the first time. Companies launching an IPO are mandatorily required to list them on a prominent stock exchange before making the shares available to the public. Once the shares are issued, they can be traded in the secondary market of the exchange.

The Bombay Stock Exchange is a popular and trusted exchange in the country. When a company lists its stocks on the BSE, the awareness of its upcoming stocks is spread across investors. This allows the company to attract investors and raise capital. On the other hand, investors prefer shares listed with exchanges like the BSE as they can encash their investment whenever needed.

Some additional information about the Bombay Stock Exchange

Here are some quick facts about BSE India:

  • There are around 5400 companies listed on the BSE
  • The market capitalization of the Bombay Stock Exchange is around $3.6 Trillion
  • BSE is present in more than 450 cities across India
  • It is the oldest stock exchange in Asia
  • The S&P BSE Sensex is the most widely tracked stock market benchmark index in India
  • The vision of BSE India is: ‘Emerge as the premier Indian stock exchange by establishing global benchmarks.’
  • BSE is operated through a unique and proprietary computer system known as the “BSE On-Line Trading System” or BOLT.
  • It has received ISO 9001:2000 certification in the areas of surveillance and clearing or settlement functions.
  • The exchange is open for trading from 9:15 AM to 3:30 PM
    Also Read: What is NSE?

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Frequently Asked Questions

BSE launched the S&P BSE Sensex in 1986 to help investors get a quick view of the performance of the exchange and the overall sentiment of investors. If the Sensex increases from the previous day, then it is believed to be an indicator of positive overall investor sentiment. However, unless you are investing in the Index, it is prudent to analyze the performance of individual stocks before investing.

You can invest in BSE Online by opening a trading account with a stockbroker registered with the Bombay Stock Exchange. Once your account is opened, you can access the platform provided by the broker to enter orders and start trading.