This is the first in a series of posts to provide /r/investing participants with a basic understanding the Indian markets. This posts is on the Indian Exchanges, their components and volumes.
Currency: All stock traded on Indian exchanges is in Indian Rupee (INR). Current exchange rates for INR are here. The annualised INR volatility against USD is 5% to 15% discounting outliers.
Exchanges:
India has 2 main stock exchanges: - BSE: The Bombay Stock Exchange - NSE: The National Stock Exchange
The BSE is older and is Asia's first stock exchange. It started in 1855 as an informal gathering of brokers. It's the 11th largest exchange globally with a total market capitalisation of $2 Trillion. It has about 5,800 listings
The NSE, set up in 1992, is the new kid on the block. it has only about 1,800 listings but a market cap equal to the BSE and is the 12th largest exchange globally. It's roughly the equal of the NASDAQ is the sense that it has always been a more technologically advanced exchange.
Several thousand companies are listed and trade on both exchanges which makes for some interesting arbitrage opportunities sometimes as NSE also has far more participants and it's price moves tend to be sharper and and ahead of the BSE in some instances but equally susceptible to price anomalies due to investor activity.
Volume wise, any stock with a listing on both exchanges is going to see more trading activity on the NSE than the BSE but this difference is going away slowly.
Their Indices:
The BSE is dominated by older companies, which is obvious since it had a 140 year start on the NSE and was the only exchange on which to list for that time.
However, given the nature of the Indian market where a handful of companies dominate the market cap and volume tables, the two exchanges have benchmark indices of a fairly small number of stocks:
- BSE Sensex: 30 components. Constructed and managed now by S&P
- NSE Nifty: 50 components. Constructed and managed by IISL which is a NSE subsidiary
The Sensex is dominated by Financials which is mostly attributable to HDFC and ICICI which are 2 of the largest private sector banks in the country. The next 2 largest sectors are Consumer Discretionary and Energy but he drop from #1 to #2 is massive.
The Nifty 50 is also dominated by the Banks though to a lesser degree than the Sensex (27% vs 40%). The subsequent sectors are different however with Computer software taking the #2 spot.
There are multiple ETF's which follow wither index and trade on international exchanges. INDY, for example, is a Nifty etf.
that's all for now. In the next post, I will get into the different sectors with respect to the companies, dispersion and fundamental performance over time.
Submitted January 02, 2018 at 02:13PM by wanmoar http://ift.tt/2CsKRn8
