Definition
The Bombay Stock Exchange (BSE) is an Indian stock exchange located on Dalal Street in Mumbai. It was established in 1875 and is regarded as one of the oldest stock exchanges in Asia. The BSE provides a platform for the trading of stocks, bonds, and other securities. It is pivotal in facilitating liquidity, capital formation, and the efficient allocation of resources within the Indian economy.
Examples
Example 1: Stock Listings
The shares of many renowned companies, such as Reliance Industries, Tata Consultancy Services, and Infosys, are listed and traded on the BSE. Investors globally participate in trading these stocks due to their high liquidity and strong market capitalization.
Example 2: Index Benchmark
The BSE SENSEX is the benchmark index of the Bombay Stock Exchange, consisting of 30 of the largest and most actively traded stocks. It serves as a barometer for the overall performance of the Indian equity market.
Example 3: New Listings
Recently, fintech start-ups in India have used the BSE’s platform to launch Initial Public Offerings (IPOs). This provides a way for these companies to raise capital from public investors for expansion and development.
Frequently Asked Questions (FAQs)
1. What is the significance of the BSE SENSEX?
The BSE SENSEX, or the Bombay Stock Exchange Sensitive Index, is the flagship index of the BSE, representing the performance of 30 well-established and financially sound companies listed on the exchange. It is widely used to gauge the health of the Indian stock market.
2. How can one start trading on the BSE?
To trade on the BSE, an individual needs to open a Demat and a trading account with a registered brokerage firm. Once the accounts are open, one can buy and sell stocks listed on the BSE through the brokerage’s trading platform.
3. What role does BSE play in the Indian financial market?
The BSE plays a crucial role in the Indian financial market by providing a platform for the listing and trading of a wide range of securities. It enhances transparency, ensures liquidity, facilitates price discovery, and aids in resource allocation.
4. Is the BSE accessible to international investors?
Yes, the BSE is accessible to international investors, subject to certain regulations and guidelines laid down by the Securities and Exchange Board of India (SEBI). Foreign institutional investors (FIIs) and Non-Resident Indians (NRIs) can participate in the Indian stock market through the BSE.
5. What regulatory body oversees the functioning of BSE?
The Securities and Exchange Board of India (SEBI) is the regulatory body that oversees the functioning of the Bombay Stock Exchange (BSE) to ensure fair practices, transparency, and investor protection.
Related Terms
1. NSE (National Stock Exchange)
The National Stock Exchange (NSE) is another major stock exchange in India, established in 1992. It operates electronically and is known for its efficient trading systems.
2. IPO (Initial Public Offering)
An Initial Public Offering (IPO) is a process where a private company offers its shares to the public for the first time to raise capital.
3. Market Capitalization
Market Capitalization is the total market value of a company’s outstanding shares of stock. It is calculated by multiplying the current share price by the total number of outstanding shares.
4. Liquidity
Liquidity refers to how quickly and easily an asset or security can be converted into cash without significantly affecting its market price.
5. Dalal Street
Dalal Street is a term used synonymously with Mumbai’s financial district and is where the Bombay Stock Exchange (BSE) is located.
Online Resources
- Bombay Stock Exchange Official Website
- Securities and Exchange Board of India (SEBI)
- Investopedia: Bombay Stock Exchange (BSE)
Suggested Books for Further Study
- “The Intelligent Investor” by Benjamin Graham
- “Security Analysis” by Benjamin Graham and David Dodd
- “The Warren Buffett Way” by Robert G. Hagstrom
- “Common Stocks and Uncommon Profits” by Philip A. Fisher
- “A Random Walk Down Wall Street” by Burton G. Malkiel
Accounting Basics: “Bombay Stock Exchange (BSE)” Fundamentals Quiz
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