What is the Bombay Stock Exchange (BSE)?
The Bombay Stock Exchange (BSE) is India’s premier stock exchange and one of the largest exchanges globally, both in terms of number of listings and market capitalization. With over 5,000 companies listed, BSE operates a platform that facilitates trading in various financial instruments including equities, derivatives, debt instruments, and mutual funds. The exchange was established in 1875, making it one of the oldest exchanges in Asia.
Key Highlights:
- Main Index: BSE Sensex (comprising 30 of the largest and most actively traded stocks on the exchange).
- Established: 1875.
- Instruments Traded: Equities, derivatives, debt instruments, and mutual funds.
- Number of Listed Companies: Over 5000.
- Headquarters: Mumbai, Maharashtra, India.
- Derivatives Trading: Introduced in the year 2000.
Examples
- Company Listing Example: TCS (Tata Consultancy Services) is one of the numerous companies listed on the BSE, showcasing the exchange’s wide scope and inclusivity in the Indian market.
- BSE Sensex Constituents: Stocks like Reliance Industries, Infosys, and HDFC Bank are representative of the diverse industrial sectors influencing the BSE Sensex.
- Derivative Trading Example: Futures and options contracts for the BSE Sensex were introduced to enhance liquidity and provide hedging opportunities.
Frequently Asked Questions
What is BSE Sensex?
The BSE Sensex is the flagship index of BSE, consisting of 30 well-established and financially sound companies across key sectors.
When was derivatives trading introduced on the BSE?
Derivatives trading commenced at BSE in 2000, allowing for advanced financial instruments like futures and options.
How does the BSE support small and medium-sized enterprises (SMEs)?
BSE SME platform caters to the capital-raising needs of small and medium enterprises, providing them with access to a broader market.
Is the BSE Sensex limited to Indian companies only?
Yes, the BSE Sensex primarily includes large-cap Indian companies, representing a cross-section of the economy.
What is the role of BSE in the Indian economy?
BSE facilitates investment and enables the mobilization of resources, contributing significantly to the growth and development of the Indian economy.
Related Terms
National Stock Exchange (NSE)
The National Stock Exchange (NSE) is another major stock exchange in India, founded in 1992, which operates similarly to the BSE.
Market Capitalization
Market capitalization refers to the total market value of a company’s outstanding shares of stock.
Initial Public Offering (IPO)
An Initial Public Offering (IPO) is the process through which a private company offers its shares to the public for the first time to raise capital.
Financial Derivatives
Financial derivatives are contracts whose value is derived from an underlying asset, such as stocks, bonds, or indices.
Online References
Suggested Books for Further Studies
- “Investing in India: A Value Investor’s Guide to the Biggest Untapped Opportunity” by Rahul Saraogi.
- “Understanding Options” by Michael Sincere.
- “The Intelligent Investor” by Benjamin Graham.
Accounting Basics: “Bombay Stock Exchange” Fundamentals Quiz
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