Stock trading 101- understanding the Stock Exchanges, trading indices and intra-day trading

The stock market is a place where you can invest in a wide range of investment instruments; from shares to mutual funds and bonds to money market instruments. Most investment companies provide online trading platforms on which you can conduct your trades in a systematic and strategic manner. You can invest in shares for a specific tenure or opt for intra-day trading as well. But before you understand or learn the nitty-gritties of stock trading, including what is intra-day trading you should have knowledge about the stock exchanges in India and their indices. It is also important to know about Sensex and Nifty.

What is NSE and BSE?

If you are interested in the share market, you need to know about the Indian Stock Exchanges on which trades are conducted. There are two main Stock Exchanges in India. They are:

The Bombay stock Exchange

Located on Dalal Street in Mumbai, the Bombay Stock Exchange or BSE was established in 1875. It is the oldest stock exchange in Asia and also holds the record of being the fastest stock exchange in the world, boasting of a median trade speed of approximately 6 microseconds. There are over 5,500 companies that are publicly listed on the Bombay Stock Exchange.

The National Stock Exchange

Established in 1992, the National Stock Exchange or NSE is India’s first demutualized electronic exchange. It is India’s first exchange which provides a fully-automated, modern screen-based electronic system of trading, offering easy and convenient trading facilities to traders nationwide. NSE is the 12th largest stock exchange in the world.

What is Sensex and Nifty

Sensex – Definition

Short for ‘Sensitive Index’, Sensex is essentially a yardstick or an index of the top 30 companies from more than 20 different sectors that are highly traded on the Bombay Stock Exchange. In Sensex, the indices calculation is done by multiplying the weighted average of certain government held shares and company promoters, calculating the weighted average price. The base year for this calculation is 1978-79, with a set index value of 100. The term free float market capitalization is used in reference to Sensex which is essentially the proportion of shares that a public company issues and are traded actively in the stock market.

Nifty – Definition

Nifty is an abbreviation for the term ‘National Fifty’. It is the yardstick or index for the 50 best companies from over 20 sectors that are publicly traded on the National Stock Exchange. To calculate Nifty, weighted average market capitalization of the 50 companies is taken into account, on the basis of the weights assigned to every company. The base year for this calculation is 1995, with a set index value of 1,000. In reference to Nifty, market capitalization is a term used to denote the aggregate or total market value of the company which is calculated by multiplying the outstanding shares and the current market value or price of each share.

Intraday trading meaning

While some traders prefer to buy and sell shares periodically, most others prefer intra-day trading as well. Intraday trading is a bit more complicated than traditional share trading. It involves purchasing and selling stock in a single trading day, with investors focusing on earning profits by harnessing the movement of stock indices. As such, profits are earned by harnessing the fluctuation of stock prices and all orders are squared off within a single trading day.

Now that you know what is sensex and nifty, BSE and NSE and intra-day trade meaning, you can begin your stock market investments. Keep your financial goals and risk appetite in mind before investing

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