Stock Exchange

What are stock exchanges?

Stock exchanges are regulated platforms or marketplaces where securities, such as stocks and bonds, are bought and sold. They facilitate the trading of stocks between investors, providing a transparent and organized environment for price discovery, liquidity, and trade execution. In India, major stock exchanges include the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Companies list their shares on these exchanges through an Initial Public Offering (IPO), and after that, stocks can be traded by investors. Stock exchanges play a vital role in the economy by helping companies raise capital and allowing investors to buy and sell assets efficiently.

What are the major stock exchanges in India, and how do they differ?

In India, the two major stock exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The NSE, established in 1992, is the largest by market capitalization and trading volume, particularly in derivatives, with its benchmark index, Nifty 50. The BSE, founded in 1875, is the oldest exchange and has a broader range of listed companies, with its index, Sensex, tracking 30 top firms. While the NSE is known for modern technology and high trading volumes, the BSE holds historical significance and a wider list of companies. Both are regulated by SEBI.

What is the role of SEBI (Securities and Exchange Board of India) in regulating the stock market?

The Securities and Exchange Board of India (SEBI) plays a crucial role in regulating and overseeing the stock market in India. As the primary regulatory authority, SEBI ensures that the securities market functions in a fair, transparent, and efficient manner. Its key functions include:

Protecting Investors: SEBI safeguards investors by enforcing rules to prevent fraudulent practices, market manipulation, and insider trading.
Regulating Market Intermediaries: It oversees the functioning of stock brokers, mutual funds, and other market intermediaries, ensuring they operate in compliance with regulations.
Facilitating Market Development: SEBI promotes the growth of the securities market by developing new financial products, encouraging investor participation, and improving market infrastructure.
Ensuring Fair Practices: It enforces laws to ensure that listed companies disclose accurate and timely information, providing investors with the data needed for informed decision-making.
Supervising Exchanges: SEBI monitors stock exchanges like the NSE and BSE to ensure their operations are transparent and efficient, adhering to regulations.

What's the difference between the primary market and the secondary market?

Here’s the comparison between the primary market and the secondary market in tabular form:

Feature	Primary Market	Secondary Market
Definition	Market where new securities are issued for the first time.	Market where previously issued securities are traded.
Purpose	To raise capital for the issuing company.	To provide liquidity and enable trading of securities.
Participants	Investors buy directly from the issuing company.	Investors trade securities among themselves.
Examples	IPOs, rights issues, private placements.	Stock exchanges (NSE, BSE).
Flow of Funds	Funds go directly to the company.	Funds are exchanged between investors.
Impact on Company	Company raises capital for expansion or operations.	Company does not benefit directly from transactions.

What are the different types of investors participating in the Indian stock market?

Here’s a comparison of Retail Investors, High Net-Worth Individuals (HNIs), Foreign Institutional Investors (FIIs), and Domestic Institutional Investors (DIIs) in tabular form:

Investor Type	Description	Investment Style	Risk Tolerance
Retail Investors	Individual investors with personal funds.	Invest in stocks, mutual funds, and other financial products.	Varies widely (conservative to aggressive)
High Net-Worth Individuals (HNIs)	Individuals with significant wealth (₹2-5 crore+).	Invest in stocks, bonds, private equity, and other assets.	Medium to high
Foreign Institutional Investors (FIIs)	Foreign entities like mutual funds, pension funds, hedge funds.	Large-scale investments in equities, bonds, and other markets.	Generally high (seeking higher returns in emerging markets)
Domestic Institutional Investors (DIIs)	Indian institutions like mutual funds, insurance companies, and pension funds.	Long-term investments in stocks, focusing on blue-chip companies.	Medium to low

Each investor type plays a distinct role in the market, with varying levels of investment size, strategy, and risk appetite.

What are AIF's?

Alternative Investment Funds (AIFs) are investment vehicles that pool capital from accredited investors and invest in assets that are not typically available through traditional investments like stocks, bonds, or mutual funds. AIFs provide a way for investors to diversify their portfolios by investing in alternative asset classes, such as private equity, hedge funds, real estate, infrastructure, commodities, and venture capital.

Who are Promoters?

Promoters are individuals or entities that initiate and establish a company, taking responsibility for its development and growth. In the context of the stock market, promoters are often the founders, major shareholders, or key figures behind the creation of a business. They typically have a significant stake in the company and play a central role in its strategic decisions, operations, and management.