Economy
Bombay Stock Exchange
Bombay Stock Exchange
The Bombay Stock Exchange (BSE) is a recognised stock exchange in India that provides an organised platform for the buying and selling of securities. Founded in 1875, BSE is Asia’s oldest exchange and the world’s largest exchange in terms of the number of listed companies.
Key Facts
- Established: 1875
- Original Name: It was established as the Native Share and Stock Brokers’ Association
- Headquarters: Mumbai, Maharashtra
- Location: Dalal Street, Mumbai
- Significance: It is the oldest stock exchange in Asia.
- Recognition: In 1957, the BSE became the first stock exchange to be officially recognised by the Government of India under the Securities Contracts (Regulation) Act, 1956.
- Regulation: It is regulated by SEBI.
- Benchmark Index: The primary benchmark index of the Bombay Stock Exchange (BSE) is the S&P BSE Sensex.
Investment Methods
The BSE provides several investment methods:
- Equity: Buying company shares to gain returns via dividends and price growth.
- Mutual Funds: Professionally managed investment funds that pool investors money and invest in securities like bonds and stocks
- Initial Public Offerings (IPOs): The process that private companies use to offer shares for investment for the first time
- Exchange Traded Funds (ETFs): Investment funds that track specific indices for investors
- Bonds: Both corporate debt and Government Securities (G-Secs) are traded on the BSE, providing safer, fixed-income returns via periodic interest (coupon) payments.
- Derivatives: Financial instruments deriving value from underlying assets like options and futures
BSE SENSEX
BSE SENSEX is the benchmark index of the Bombay Stock Exchange (BSE).
- Composition: It measures the performance of the 30 of the largest, most liquid and financially sound companies across key sectors of the Indian economy that are listed at BSE Ltd.
- Launch Date: It was launched on 2nd January 1986.
- Base Year: 1978–79 (3 April 1979)
- Review of Constituents: The inclusion and exclusion of companies is reviewed semi-annually, in June and December.
- Method: It is calculated using the free float market capitalisation methodology.
Large cap, Mid cap, and Small cap
- Large cap, Mid cap, and Small cap are categories used to classify companies based on their market capitalisation.
- Market capitalisation (market cap) can be defined as the market value of all the company's shares, calculated by multiplying the total number of company’s outstanding shares by the current market price of one share.
- Securities and Exchange Board of India (SEBI) has defined Large cap, Mid cap and Small cap as follows:
- Large-cap stocks: 1st to 100th company in terms of full market capitalisation
- Mid-cap stocks: 101st to 250th company in terms of full market capitalisation
- Small-cap stocks: 251st company onwards in terms of full market capitalisation
