Bombay Sensex Stock Exchange Limited, or better referred to as BSE, was the first stock exchange of Asia. It is also one of the quickest stock exchanges in the world, with a speed of 6 microseconds. BSE was established in 1875, and since then, it has smoothened the growth of the Indian corporate sector by giving it a structured capital-raising platform. Here, we would be discussing in detail about BSE Sensex stocks!
What is the Bombay Stock Exchange?
BSE is the oldest stock exchange in India. It can be considered as the integral component of the “$1 trillion” club, as it has a market capitalization value of $2.2 trillion, the eleventh largest in the world. This stock exchange was founded in the year 1875 by Premchand Roychand and is managed by Sethurathnam Ravi, who is currently serving as the chairman.
How Does It Work?
All the financial transactions in BSE are carried out online using an electronic trading system. The market orders of BSE can be directly placed online without the need of an external specialist. In the absence of the limit orders, the whole focus gets shifted from the buyers and sellers to the value of transactions in a day.
Generally, trading in the BSE share market is done with the help of a brokerage agency that takes a stipulated charge from the investors. The access to direct investment is given only to a limited number of preferential investors that make large transactions in the stock market. Such transactions make use of the Bombay Online trading (BOLT) platform for efficient trading. The transactions that are made in BSE Sensex are generally done using a T+2 rolling settlement, where all the transactions get processed in a matter of two days.
Advantages of Listing on BSE
A company that is listed on the BSE enjoys several benefits. Some of them are as follows:
- Hassle-free capital generation: The companies that are listed on BSE gain the trust of different investors in the market. This spreads knowledge about a budding business and allows one to analyze the condition of these companies before investing in them. The funds required to meet the requirements of a firm can be easily obtained by issuing debt and equity securities, which ultimately creates wealth.
- Legal Supervision: By having a listing on BSE, investors can easily skim through companies and find whether they are fraudulent or genuine. SEBI regulates several regulations to monitor the registered companies and minimize the losses for the investors due to a business’s illicit activities.
- Timely Display of Information: Proper information about reinvestment patterns, as well as total revenue generation, has to be annually published by all firms that are listed under BSE. As per SEBI regulations, even the bonus, total dividend disbursed, book-to-closure facilities, etc. need to be displayed.
- Proper pricing rules The price of securities while trading in the BSE share market can be determined by finding out the supply and demand of the current rate. This way, the real share value is reflected, which ultimately affects the market capitalization of a company and makes it easier to procure funds.
- Collateral guarantee: When a company issues security, they act as a collateral guarantee for availing loans. Generally, most financial institutions accept equity shares that are listed in BSE for keeping as leverage against funds.
Major Investment Segments in BSE
The companies listed under BSE may use the following financial instruments for raising funds for the business:
- Government Securities and Debt Instruments: Such financial tools are generally issued by a firm for raising finances without giving any ownership to the investors. These tools are relatively risk-free and can be traded in both primary as well as a secondary market. Different government securities can be traded in BSE, such as floating rate bonds, zero-coupon bonds, capital indexed bonds, as well as dated securities.
- Equity: The equity instruments mainly consist of shares issued by a firm for raising adequate capital for operating smoothly. A large amount of equity can be raised during the first public offering of a new firm in the capital market. The equity that is already issued can also be used for trading among the retail customers in the secondary market with the help of a stockbroker.
Conclusion BSE is considered one of the best platforms for trading, not only in India but in the whole world. The above article was an introduction to BSE, along with information about the listing on BSE.