What Is Stock Exchange

What Is Stock Exchange :

In the previous post you had learned about the stock market, today’s post is about the stock exchange, what is the stock exchange, and how it works. Often both the terms stock market and stock exchange are used interchangeably, but many people do not understand the difference between these two.

So after reading this post, you will get to know about the difference between both stock market and stock exchange.

What Is Stock Exchange

You must be aware that shares are bought and sold in the stock market, where hundreds of companies are listed in the stock market, and take off their shares. Investors buy those shares and invest in that company in a way, and they earn profit by selling them when the share price rises.

So this entire work of stock market i.e. stock market is possible only through Stock Exchange. The stock exchange itself provides the infrastructure to the stock market, through which a company can bring its shares in the stock market, and investors are able to trade those shares, that is, buy and sell shares.

A stock exchange is the centralized place where publicly traded companies unload their shares, and investors buy and sell those shares, that is, a stock exchange brings companies and investors together, and they share them on that platform. (Platform) where trading of shares, bonds and other securities can be done between them.

The stock exchange does not hold shares with itself, rather it acts as a market where both the buyer of shares and seller of shares interact with each other. Stocks or shares can be bought or sold only if they are listed on any stock exchange.

There are certain rules and regulations of the stock exchange, which are set by SEBI. The rules and guidelines laid down by SEBI are to be followed by both the company and the investor parties, and the entire business of the exchange is carried out under those rules.

If we talk about the difference between stock market and stock exchange, then stock market is a general term used for all types of stock trading, whereas stock exchange is the platform where the facility and infrastructure is provided for this trading. Is. Stock Exchange Kya Hota Hai After knowing this, let us now know, how the stock exchange works.

How Does Stock Exchange Work

Simply put, the way things are bought and sold in a normal market, that is, where there are Buyers and Sellers of goods, similarly a stock exchange is also a Marketplace, but here instead of goods, the company’s shares, bonds And other securities are bought and sold.

When a company needs funds to expand its business or meet its needs, the company has two options, either to take a loan from the bank, or to list itself on the stock exchange. Issue your shares to the public.

If the company takes a loan from the bank, then the company also has to pay huge interest on the loan, so to avoid this, the company is listed on the stock exchange and issues its shares among the general public. The public buys those shares, and in return the company receives the necessary funds.

When a company issues its shares to the public for the first time, it has to go through the primary market, that is, the company first brings its own (IPO) among the public. When all the shares of the company are issued to the public through IPO, that is, the shares are sold, then the trading of those shares purchased is done on the secondary market i.e. Stock Exchange.

The stock exchange monitors the buying and selling of shares by the investors, so that the demand and supply of shares can be ascertained. The price of a stock increases or decreases according to the demand and supply, if more and more people want to buy a share, then its demand and price increases, while there are more sellers of the stock, then its price decreases.

Talking about the Indian Stock Exchange, it is free and transparent, as there is no market maker or expert present in it. Trading on the Stock Exchange of India is order-driven, which is conducted on an electronic limit order book, that is, here the information of each buyer and seller can be seen, at what price and how much. One wants to sell or buy shares, and book orders are a type of database maintained by a stock exchange.

The stock market functions through a network of various stock exchanges, stock exchanges perform a host of functions such as raising funds for companies, providing investors an accessible and transparent platform for trading, passing and settlement of orders.

There are currently 9 active stock exchanges in India, out of which two main ones are (BSE) Bombay Stock Exchange and (NSE) National Stock Exchange. These exchanges are controlled by the Securities and Exchange Board of India (SEBI), ie Securities and Exchange Board of India, so let us now know in detail about BSE and NSE.

History Of Indian Stock Exchange

There are two main stock exchanges in India, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).

BSE (Bombay Stock Exchange)

If we talk about the history of Indian stock exchange, then BSE is the first and oldest stock exchange of India and Asia. It is located in Dalal Street Mumbai, Bombay Stock Exchange was started in 1875 as Native Share and Stock Brokers Association.

By the way, the stock market was started in India only in 1840, when sitting under the banyan tree near the Mumbai Town Hall, some people started dealing in shares, after which the stock market of people was seen with time. The trend increased and investors started joining it.

After this, all those who were involved in it, together they formed the Native Share and Stock Brokers Association and opened an office in Mumbai Dalal Street where BSE is located today.

This 147 year old stock exchange has played an important role in developing the Indian capital market and the corporate world. Today the Bombay Stock Exchange has a market capitalization of more than US$ 3 trillion, and more than 5500 companies are listed in it.

In the initial phase, all the work of BSE like allotment of shares, allotment etc. everything was done on paper form, in which it took 5 to 6 months to complete the process, but then in 1995 the work of BSE The work was computerized, after which the work accelerated and transparency also increased.

The index of BSE ie Benchmark Index is SENSEX, it is also called BSE30, for more information about BSE you can visit its website https://www.Bseindia.Com/.

(NSE) National Stock Exchange

The National Stock Exchange is the largest stock exchange in the country in terms of capitalisation. The market cap of NSE is more than US$ 3.4 trillion, and more than 2000 companies are listed in it. It was the first stock exchange in the country that started automated trading by eliminating the paper-based system in the stock market, after which transparency in the stock market and the number of investors also increased, the index of NSE i.e. the benchmark index is Nifty50.

The purpose of setting up NSE was to make the Indian stock market transparent, so that people can instill confidence in the stock market and investors can invest without fear, and for more information you can visit the NSE website https://www.nseindia. You can go to com.


You know how Stock Exchange and how it works, we hope, you will like the given information. If you have any question related to this post, then you can tell us by commenting below.

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