What is Stock Exchange? How does the Stock Exchange ?

 

What is Stock Exchange? & How does the stock Exchange work?

 

Meaning: As per SCRA, 1956 [Securities Contracts Regulation, Act 1956], Stock exchange is:

a)     A body of Individuals before demutualization and corporatization Scheme.

b)    A body corporate incorporated under Companies Act after demutualization & Corporation Scheme for the purpose of assisting of Securities.

Simply we can say Stock Exchange is a platform where buyer and seller of securities meet for trading.

 

Ø Popular Stock Exchange in India

a)   NSE (National Stock Exchange): NSE was Founded in 1992 and in Mumbai. Electronic trading Platform was first introduced by the NSE.

                      Website: www.nseindia .com            

        Currently approx. 1900 Stocks are listed in NSE.

·        Popular Index of NSE is “NIFTY 50”

·        Currently NSE is not listed.

 

b)  BSE (Bombay Stock Exchange): BSE was founded in 1875 and is the oldest Stock Exchange in Asia.

Sensex is the benchmark index of BSE and it derived from the words Sensitive and index. Sensex of 30 Stocks

    

            Website: www.bseindia.com/

Currently approx. 5000 Stocks are listed in BSE.

·        Popular Index of BSE is “SENSEX” (S&P BSE SENSEX)

·        Currently BSE is listed.

Ø Popular Commodity Exchange in Index

a)  MCX (Multi Commodity Exchange): MCX is a Capital Market has become an important part of the Indian Economy. A flourishing capital market would not have been possible without exchange such as National Stock Exchange and the BSE.

     Multi Commodity Exchange of India Ltd (MCX) is an independent Commodity Exchange based in India. It was established in 2003 and is based in Mumbai.

        Website: www.mcxindia.com

b)  NCDEX (National Commodity & Derivative Exchange):

                   The National Commodity & Derivatives Exchange (NCDEX) is a commodities exchange dealing primarily in agricultural commodities in India. The National Commodity & Derivatives Exchange was established in 2003, and its headquarters are in Mumbai. Many of India's leading financial institutions have a stake in the NCDEX. As of September 2019, significant shareholders included Life Insurance Corporation of India (LIC), the National Stock Exchange of India Limited (NSE), and the National Bank for Agricultural and Rural Development (NABARD).

      Website: www.ncdex.com

How does the stock market work?

The concept behind how the stock market works is pretty simple. Operating much like an Vegetable market, the stock market enables buyers and sellers to negotiate prices and make trades.

The stock market works through a network of exchanges — you may have heard of the New York Stock Exchange or the Nasdaq. Companies list shares of their stock on an exchange through a process called an initial public offering, or IPO. Investors purchase those shares, which allows the company to raise money to grow its business. Investors can then buy and sell these stocks among themselves, and the exchange tracks the supply and demand of each listed stock.

That supply and demand help determine the price for each security, or the levels at which stock market participants — investors and traders — are willing to buy or sell.

Buyers offer a “bid,” or the highest amount they’re willing to pay, which is usually lower than the amount sellers “ask” for in exchange. This difference is called the bid-ask spread. For a trade to occur, a buyer needs to increase his price or a seller needs to decrease hers.

This all may sound complicated, but computer algorithms generally do most of price-setting calculations. When buying stock, you’ll see the bid, ask, and bid-ask spread on your broker's website, but in many cases, the difference will be pennies, and won’t be of much concern for beginner and long-term investors.