For novice investors, the BSE Sensex may be a familiar term, but its meaning may be elusive. As one of the oldest stock exchanges globally, the Bombay Stock Exchange or BSE has played a vital role in the development of the Indian stock market. In this blog, we will give you a comprehensive overview of the BSE's history, its operations and essential information for beginners.
What is BSE?
Established in 1875, the BSE is the first and oldest stock exchange in Asia. It started as a private company and gained recognition under the Securities Contracts Regulation Act (SCRA) of 1956 as the first Indian stock exchange. Today, the BSE is a publicly-traded company with a market capitalization of over $2 trillion.
How does BSE work?
The BSE is a market where buyers and sellers can trade stocks and securities. Companies must undergo an Initial Public Offering (IPO) process before they can be publicly traded on the BSE. This process involves hiring an investment bank or underwriter to help determine the offer price and sell shares to investors. Once a company's shares are listed on the BSE, anyone can purchase and sell them through a broker.
The BSE also has a regulatory role in the Indian stock market. It is supervised by the Securities and Exchange Board of India (SEBI), which is responsible for regulating and overseeing all stock exchanges in India to ensure fair and transparent trading practices.
What is Sensex?
Sensex is the BSE's stock market index, which monitors the performance of the top 30 companies listed on the exchange. It uses the free-float market capitalization methodology, which only includes shares available for trade and excludes those held by promoters, governments or other strategic investors. The Sensex serves as a benchmark for the Indian stock market and investors use it to track market performance and trends.
What are the potential returns and risks of investing in BSE?
Investing in BSE-listed stocks can offer the possibility of higher returns than other investment options such as fixed deposits or savings accounts. However, higher returns come with higher risks. The value of BSE-listed stocks can fluctuate daily based on market conditions, company performance and global events, which can result in significant losses for investors. Investing in the stock market can offer tremendous opportunities for growth and financial gain, but it is crucial to conduct thorough research and comprehend the associated risks before committing your hard-earned money.
The BSE is a crucial part of the Indian stock market with a rich history of trading and investment. The Sensex, which tracks the top 30 companies listed on the BSE, is a benchmark for the Indian stock market and investors use it to track market performance and trends. While investing in BSE-listed stocks can offer the possibility of higher returns, it also comes with higher risks. It is essential to research and understand the risks before investing in the stock market.
If you're a beginner looking to invest in the stock market, it is always advisable to seek expert advice. The Liquide app provides real-time analysis and personalized investment advice based on your risk tolerance and financial goals. You can download the Liquide app on Google Play Store and Apple App Store for Android and iOS devices.