What is the Bombay Stock Exchange?

BSE, also known as the Bombay Stock Exchange was founded in 1875. It was established by Premchand Roychand and is one of the oldest stock market exchanges in Asia. BSE provides a platform for investors to trade different securities such as bonds, stocks, and instruments. Companies can get listed on BSE to raise capital. Later, investors invest in these listed companies to earn profit either by dividends or by selling and buying of stocks of the listed companies. Keep reading to learn more about the history of the Bombay Stock Exchange, the advantages of the Bombay Stock Exchange, major indices at the Bombay Stock Exchange, working on the Bombay Stock Exchange, and more in detail.

History of Bombay Stock Exchange

In the mid-19^th century, a few stockbrokers gathered under a Banyan tree in front of Bombay Town Hall, where Horniman Circle is now located. Later, they moved their location to the junction of Meadows Street, and Esplanade Road (now Mahatma Gandhi Road). Soon, there was an increase in the number of brokers which forced them to keep moving to different locations. Finally, in 1875, they found a permanent location, Dalal Street, and founded an official organization called “The Native Share & Stock Brokers Association” which was later evolved as BSE.

With the shift towards digitalization, in 1995, with the technological assistance from CMC Ltd. BSE started offering support for digital trading. Today, there are more than 5000 companies listed on BSE.

Below is the basic information about the Bombay Stock Exchange:

Features of the Bombay Stock Exchange (BSE)

The following are the features of the Bombay Stock Exchange (BSE):

• Trading: BSE offers a platform to trade various publicly listed stocks. Investors can purchase and sell these securities within the specified hours of trading.
• Getting Listed: Companies can raise capital and get listed through initial public offerings (IPO) and follow-on public offerings (FPOs).
• Commodities trading: Along with securities, BSE allows buyers to buy and sell derivatives of commodities like silver, gold, and agricultural goods.
• Compliance: BSE, along with SEBI, ensures that the listed companies follow the rules and protect investors' interests.

Role of BSE in the Indian Economy

The Bombay Stock Exchange or BSE is one of the oldest stock exchanges in India. Numerous investors invest in different investments such as IPO, equities, derivatives, ETFs, bonds, and mutual funds. Before investing, investors utilize several major indices to measure the market’s overall performance. Along with the investment hub, BSE provides various job opportunities. With the help of SEBI, BSE ensures fair and transparent transactions and operations by the companies helping investors to make informed decisions.

Difference between BSE & NSE

How does the Bombay Stock Exchange work?

Regulated by SEBI (Securities Exchange Board of India), BSE allows investors to buy and sell securities such as stocks and bonds using the electronic trading system. Using direct market access, you can directly pay market orders using the BSE online without any intervention from external specialists.

You can trade in the BSE share market using a brokerage agency by paying a certain charge. For large transactions in the BSE stock market, access is given to certain preferential investors through direct investment. For efficient trading of this exchange, BOLT – Bombay Online trading platform is used.

BSE follows a T+2 rolling settlement for transactions made online. Rest, all the transactions are processed within 2 days.

Role of BSE in the Indian Economy

The Bombay Stock Exchange or BSE is one of the oldest stock exchanges in India. Numerous investors invest in different investments such as IPO, equities, derivatives, ETFs, bonds, and mutual funds. Before investing, investors utilize several major indices to measure the market’s overall performance. Along with the investment hub, BSE is responsible for providing various job opportunities. With the help of SEBI, BSE ensures fair and transparent transactions and operations by the companies helping investors to make informed decisions. 

Investment methods through the Bombay Stock Exchange

• Equity: Buying shares of companies listed on the BSE and earning returns with capital appreciation of the stock price.
• Mutual Funds: In mutual funds, investment is made in multiple securities like stocks, bonds, and other securities. It is considered less risky as compared to investing in shares as it focuses on diversification.
• Derivatives: Investors with experience can use derivatives instruments like options and futures. These instruments are considered risky offering potentially higher returns.
• Debt instrument: Debt instruments include government and company bonds. It is considered a safer option with a fixed source of income through interest.

Financial Instrument to Raise Money in BSE

• Equity Instrument
  To raise adequate paid-up capital, a company goes public by listing itself on the share market. For the first time, a company offers an IPO (Initial Public Offering) in the primary market which is strictly regulated by SEBI. Later, through stockbrokers, these shares are offered in the secondary market.
• Debt Instrument and government securities
  Depending on the nature, debt instruments can be traded in both primary and secondary markets. A company raises funds using debt instruments and securities without offering ownership. These are considered less risky in nature and offer consistent income for investors through interest. Zero coupon bonds, floating rate bonds, capital-indexed bonds, and dated securities are various government securities.

Functions and operations of the Bombay Stock Exchange

• Primary and Secondary Market
  The primary market is where a company issues shares for the first time to raise capital. In the secondary market, trading of existing securities such as bonds, stocks, and other financial instruments is performed.
• Listing and trading
  A company applies through the issuance of securities to the BSE for listing to raise capital. It is considered a listing. On the other hand, when the shares become available for buying and selling. It is considered trading.
• Regulations and oversight
  To ensure fair trade practices and protect investors, BSE has to operate under the guidelines and regulations led by SEBI. These regulations include trading rules, disclosure norms, listing requirements, and more.
• Indices
  SENSEX (Sensitive Index) is used for measuring the performance of the company which represents the market trends. Often, SENSEX is used for understanding the economic health of the country.

Major Indices at Bombay Stock Exchange

• BSE Sensex
  BSE Sensex includes the top 30 companies actively traded stocks from various sectors of the Indian economy. It is used to gain insights into the performance of blue-chip companies.
• BSE 500 Index
  The BSE 500 index includes 500 companies from various sectors of the Indian economy. The BSE 500 index is used by investors to monitor mid-sized companies’ performance.
• BSE Midcap Index
  BSE Midcap index includes companies from various sectors with a market capitalization between ₹5000 crore and ₹20,000. The BSE midcap index is used by investors to monitor mid-sized companies’ performance.
• BSE Smallcap Index
  BSE smallcap index includes companies from various sectors with a market capitalization of ₹5000 crore or less. The BSE smallcap index is used by investors to monitor small-sized companies’ performance.
• BSE Bankex Index
  BSE Bankex index includes companies from financial and banking services. It is used by investors to monitor financial and banking companies’ performance.
• BSE Healthcare Index
  BSE healthcare index includes companies from healthcare and pharmaceutical services. The BSE healthcare index is used by investors to monitor healthcare and pharmaceutical companies’ performance.