A stock market where investors and traders come to trade financial products such as Equity, Bonds, Futures & Options. The Indian Stock Market is very competitive. It has witnessed many highs and lows and has faced lots of challenges including the recession and covid-19. These unfortunate events create ripples in the market. Despite these challenges, the Indian stock market allows investors an opportunity to earn. Not only has the market shown promising signs of recovery, but it is also presenting the investors with great wealth creation avenues through multiple upcoming Initial Public Offerings(IPO) lined up this year.

The positive and bullish market trends have also enticed the youth to invest in the market. Before investing in the Indian Stock Market, it is imperative to understand the structure and functionalities of the market.  

Leading Indian Stock Market exchanges 

Primarily, there are two stock exchanges in the country, National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). NSE is a leading stock exchange where investors can buy/sell shares of public listed companies. Established in the year of 1992, NSE is based in Mumbai. The National Stock Exchange has a flagship index by the name of Nifty50. BSE is the oldest stock exchange and was established in 1875 and is also located in Mumbai. It has a flagship index named BSE Sensex. Both exchanges have the same trading hours, trading mechanism, and process of settlement.

 Regulatory Body

The Indian stock market is regulated by the Securities and Exchange Board of India(SEBI). SEBI functions under the ownership of the Ministry of Finance, Government of India(GOI). It plays the role of watchdog to the stock market and protects the interest of retail investors. It ensures the exchanges and stockbrokers/depository participants conduct business fairly. SEBI controls the action of large investors so that they cannot manipulate the market with a large amount of cash and protects the interest of small retail investors.

Market Participants

Here is the name of market participants who actively participate in the stock market.

Retail Investors- These are individuals who trade in the stock market.

Non-Resident Indians(NRI) & Overseas Citizens of India(OCI) Investors- These investors are of Indian origin but do not reside in India.

Domestic Institutions- Domestic institutions are Indian companies having large-scale operations.

Domestic Asset Management Company(AMC)-  Indian Mutual Fund Companies come into this group.

Foreign Institutional Investors(FII)- FIIs are Non-Indian corporate institutions such as foreign asset management companies(AMC) and hedge funds.

 Financial Intermediaries

Market Participants can not trade without any registered intermediaries. They are known as financial intermediaries. They may be either individual registered stockbrokers or registered corporate entities. They ensure market participants trade smoothly. Name of financial intermediaries who facilitate the platform to investors for trading are:

Stockbrokers- A stockbroker is a registered dealer who trades on behalf of his client. He is a professional individual and holds a broking license. He works as per the regulation of SEBI. He holds a Demat account for trading purposes. 

Depository & Depository Participants- Market Participants who want to trade online apply for an online trading account. They go for a Demat account online first. According to SEBI regulations, Depository Participants offer Demat accounts to investors. All equities, bonds, and derivatives are kept in the Demat account in electronic form. A Depository is the authorised body that keeps the record of all Demat accounts and securities under these accounts. There are two depositories known as National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) registered by the Indian government and every investor is linked with a depository through his depository participant. 

Banks- Banks offer the facility of fund transfer from a bank account to an online trading account. 

Subsidiary bodies of the NSE and BSE: National Security Clearing Corporation Ltd. (NSCCL) and Indian Clearing Corporation Ltd. (ICCL)

NSCCL is the 100% subsidiary of the NSE, and ICCL is the 100% subsidiary of the BSE. Both are responsible for the clearing and settlement process of all executed trades of their respective exchanges. 

How to start trading or investing in the Stock Market of India

As per recent reports, the Indian Stock Market is the sixth-largest stock market globally. An investor needs to open a Demat account online and an online trading account after selecting a stockbroker. These days, investors have several options for stockbrokers, with some renowned and trusted brands offering zero or minimum charges Demat accounts. With the right stockbroker, investors can open a Demat account online along with an online trading account in less than 15 minutes and start trading in the market using the broker’s trading apps and web portals. 

An investor must be aware of his long-term goals and his risk tolerance capacity before investing in the stock market. There are several opportunities available in the Indian Stock Market. Required learning and understanding the market movement can give profit to investors.