Stock Markets in India offer a wide range of products. A lot of Products And Services Available In The StockMarket. The extensive plus innovative approach of both NSE and BSE are inclining the consumers towards a robust risk management module.
As we have already discussed in detail about the origination of stock exchanges in India, market participants or players of the stock market, and stockbrokers in the Indian stock market.
Now, it’s time to shed some light on the types of products offered by the recognized stock exchanges in India. We have divided this blog into two parts. The first part will contain the products offered by National Stock Exchange (NSE) and the other part will tell you about the products granted by the Bombay Stock Exchange (BSE).
Types Of Investment: stock market
The National Stock Exchange & Bombay Stock Exchange of India are circulating a wide variety of investment products most comprehensively and innovatively fulfilled through a vertically integrated business model backed by a sturdy risk management mode structure.
NSE is always rummaging for innovative products and methods to boost its credibility among Indian consumers. The National Stock Exchange launched its Capital Market segment on November 3, 1994. And since then, it has been extending the series of its products and services in India.
The products are categorized into three main asset classes; Capital market for the listing and trading of equities, fixed income securities, and the derivatives market, for trading on National Stock Exchanges (NSE).
In the National Stock Exchange (NSE), the equity and equity-related products are available for trading in the cash market. These products consist of stocks, IDRs (International Depository Receipts), ETFs (Exchange Traded Funds), and other close-ended mutual fund schemes.
On 3rd November 1994, NSE started trading in the equities segment, often known as the Capital Market Segment. Shortly, It became the largest stock exchange in India concerning volumes transacted.
As per the statistics shared by the World Federation of Exchange (WFE) for CY2020, the National Stock Exchange (NSE) was ranked 4th worldwide in the cash equity segment by the total volume of trades that took place on NSE India.
Trading volumes in the equity segment have extensively grown with average daily turnover increasing from Rs. 17 crore during 1994-95 to around Rs. 68525 crore as of Sep 2021. The National Stock Exchange (NSE) has over 1920 listed companies with a market capitalization of Rs. 25806565 crore as of Sep 2021.
These are the investment instruments offered by the National Stock Exchange.
- Equities: Indian securities market is separated into primary and secondary markets. The primary market is concerned with the issue and sale of newly listed shares of companies, while the secondary market is inclined towards trading in the existing listed shares. The stock market or Equities market is the place where listed securities are traded in the secondary market.
- Exchange-Traded Funds: These instruments have acquired great affection as one of the financial instruments. Various mutual funds provide (ETFs) products. They are divided into various subcategories such as Equity, Gold, and International ETF instruments.
- Initial Public Offerings: As stated earlier, the primary market is the place that provides an opportunity for new companies to list their shares on the recognized stock exchanges in India. Companies propose their equities to investors through an initial public offering. We have already covered a blog on ‘IPOs’.
- Mutual Fund: You can think of a mutual fund as a pool of funds accumulated from different investors. As the name suggests, ‘mutual’ means ‘something in collaboration’ and ‘fund’ means ‘money’. So, a mutual fund is like an investment vehicle for every investor that provides an option to invest money in diversified, well-managed, and reputed companies easily. The best thing about mutual funds is that they extend small investors’ access to the stock market professionally (passively). Mutual fund managers invest in different securities such as equities, bonds, etc. Ultimately, it’s a passive way to invest in the stock markets in India.
This segment is responsible for providing current market reports, historical data, and product information. The derivatives segment of the National Stock Exchange provides insightful information about trading systems, processes, clearing and settlement, risk management, and other products available in the exchange.
You can find these investment instruments online at the NSE’s derivatives segment.
- Equity Derivatives: It is a group of derivatives that compounds one or more underlying equity securities. The most talkative products of the derivative segment on NSE are Futures and Options. These two derivatives are commonly lying under the equity derivatives. F&Os are available on Stocks and Indices.
- Currency Derivatives: You might or might not have come across the FX Future, which is the commonly used synonym of currency future derivatives. As the National Stock Exchange transacts in INR. So, this derivative class helps investors to hedge on different foreign exchange investment instruments. You can find Currency Derivatives on four currency pairs i.e., US Dollars (USD), Euro (EUR), Japanese Yen (JPY), and Great Britain Pound (GBP). Along with this, Cross Currency Futures & Options on US Dollar and Euro, Great Britain Pound and US Dollar, and US Dollar and Japanese Yen can also be traded in this segment of NSE India.
- Interest Rate Futures: As per the National Stock Exchange of India’s views on Interest Rate Futures, “ it is an agreement to acquire or sell a liability instrument at a particular future date at a price that is fixed today.” Also, the underlying collateral for Interest Rate Futures is either Government Bond or T-Bill. These contracts are based on 6 years, 10 years, and 13 years Government of India Security (NBF II) and 91-days Government of India Treasury Bill (91DTB).
This particular segment helps you with the Current Market Reports of NSE India. It comprises Current Market Summaries, Historical Data, and Product Information. This segment also contains large investors and has a high average trade value. The commencement of this segment by the National Stock Exchange (NSE) in India has affected transparency and efficiency in the debt exchange.
These investment instruments are available in this segment.
- Corporate Bonds: These corporate bonds are debt securities issued by private and public organizations. They are issued to raise money for different organizational purposes. When one acquires a corporate bond, one lends money to the “issuer,” the organization that issued the bond. Although it provides an IOU (I Owe You) from the organization, it doesn’t have a possession interest in the issuing company, unlike when one acquires the company’s equity stock.
- Electric Debt Bidding Platform (EBP): The Electronic Debt Bidding Platform (NSE-EDP) is established to issue debt securities on a private placement basis. NSE was founded (ESP) on July 1, 2016, aiming to bring a systematic and transparent price discovery mechanism. It also reduced the time and cost of issuance of corporate bonds.
- Non-Competitive Bidding in G-Sec, SDL & T-bill: This type of instrument consists only of Government of India Securities (G-Sec), Treasury Bills (T-Bills), and State Development Loans (SDL) are issued in the primary market through auctions convoyed by Reserve Bank of India). An investor can bid on these instruments under Competitive Bidding or Non-Competitive Bidding.
The stock exchanges of India are providing a wide array of investment instruments. An investor gets an opportunity to diversify his portfolio by using these distinct investment instrument classes. You have got an idea of how many products and services are in the central stock exchanges of India.
It’s the right time to start your investment journey. Also, the stock market runs on-trend, and trends are created by the public in general. Now, you can also team up with like-minded people to skyrocket your investment journey. Join , India’s only social media network for the stock market enthusiasts. Connect with other stock traders to learn, earn, and have fun.
Frequently Asked Questions
What are the products traded in the Indian securities market?
The securities market comprise equities, index futures, index options, stock futures, stock options, long term bonds, medium-term bonds, short term bonds, money market securities, equity funds, debt funds, hybrid funds, structured products, REITS, INVITs, etc
How many stocks are listed in NSE?
The number of corporations listed in NSE and BSE across India FY 2008-2020. In the financial year 2020, a total of over 7,400 corporations were listed in the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) across India.
How many stocks are there in Nifty 50?
The index includes only 50 of the 1600 companies that trade on the NSE, it catches 66% of its float-adjusted market cap.
How do you know if a company is large-cap?
A large-cap corporation has a market capitalization of over 10 billion. A mid-cap corporation has a market capitalization between 2 billion and 10 billion, and a small-cap company has less than $2 billion in market capitalization.
How do you know if a company is small-cap?
A small-cap is a company with a business capitalization of between 300 million and 2 billion. Small-cap investors try to overcome institutional investors by focusing on growth possibilities. Small-cap stocks historically have outperformed large-cap funds but are also more volatile and riskier.