As an investor, you should be aware of stocks, markets, index and exchanges.
Stocks – A stock is generally issued by the company to raise money. A stock is a part of the whole part of the company, so if you buy a share of the company, you become a part-owner of the company.
Stock Exchange – A stock exchange is a regulated market for trading. If a company wishes to sell its shares, it should be registered in the stock exchange. Once registered, it can list its shares and sell them at a price to the investor. Investors and traders can connect to exchanges via brokers, who place buy or sell orders on the exchange. Traders can buy and share sells of different companies. The stock exchange offers high liquidity, as the process is transparent and fast. A dividend is paid to investors based on the company’s growth if the company earns profit, the dividend increases. If the company is growing, it attracts more investors, and the company issues more shares. As the demand of shares increases, the price of share also increases. A stock exchange also evaluates the price of the share. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the two primary stock exchanges in India. We’ll read more on NSE and BSE meaning later in this article.
Index – A stock shows the overall condition of the market. The list of stocks is extensive and can be confusing; an index helps ease stock picking by classifying companies and shares based on size, sector, and industry type. Nifty is the index for NSE, and Sensex is the index for BSE. It is a set of 50 stocks of NSE (30 of BSE) based on the company’s reputation, market capital and significance. The index value is calculated as ‘Weighted Average Market Capitalisation’. If the stock prices go up, so does Nifty and Sensex, if the stock prices decline, Nifty and Sensex index falls. The index represents the trend and performance of stocks.
Let’s have a look at BSE and NSE meaning:
BSE (Bombay Stock Exchange): BSE is the oldest and the fastest stock exchange. It was Asia’s first stock exchange. BSE is an ideal choice for beginners or investors who are looking for steady, low-risk investments.
NSE (National Stock Exchange): NSE is the leading stock exchange and was the first stock exchange that offered a screen-based system for trading. It brought transparency to Indian market trading with a fully integrated business model that provides high-quality data and services. NSE has a high trading volume than other stock exchanges. NSE is a good option for investors who take high risks.
NSE and BSE provide a safe market for both investors and companies. Both offer high liquidity, high reach and high transaction speeds. The Securities and Exchange Board of India (SEBI) is the regulatory body for stock exchanges that promotes trading and safeguards investor interests.
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