What Is the National Stock Exchange of India Limited (NSE)?

What Is the National Stock Exchange of India (NSE)?

The National Stock Exchange of India (NSE) is India's largest financial market. Incorporated in 1992 and launched in 1994, the NSE has developed into a sophisticated electronic market.

As of December 2023, the NSE was the sixth-largest stock exchange in the world, as measured by market capitalization.

In January 2024, its market capitalization and that of the Bombay Stock Exchange (BSE) totaled $4.33 trillion, making India the fourth-largest stock market worldwide.

Understanding the National Stock Exchange of India

Trading on the NSE commenced in 1994 with the launch of the wholesale debt market and then a cash market segment shortly thereafter. Today, NSE conducts transactions in the equity, wholesale debt, and derivative markets.

The NSE offers a solid market infrastructure and is seen as a driving force behind India's economic growth. Its high standards of operation and corporate governance underscore the attention it places on investor protection and access to capital.

The NSE maintains market indices that track various market capitalizations, volatility, specific sectors, and factor strategies. One of the more popular these indexes is the CNX Nifty 50 Index, the first of more than 350 Nifty-branded investments offered by the NSE.

The Nifty 50 Index tracks the largest and most liquid assets in the Indian equity market. It's composed of 50 companies and covers 14 sectors of the Indian economy.

U.S. investors can gain exposure to the index by investing in an exchange-traded fund (ETF) that tracks it, such as the iShares India Index ETF (XID).

In December 2023, the NSE's market capitalization was $4.3 trillion. The value of equity shares traded for that month was $247.55 billion.

The CNX Nifty 50 Index should not be confused with the compiled list known as the Nifty Fifty. The Nifty Fifty is not a benchmark index but does contain the names of companies with global reach, strong balance sheets, and consistent growth.

Other Considerations

The NSE is located in Mumbai and is owned by a group of India's leading financial institutions. It was established to bring greater transparency to the Indian capital market.

It was the first exchange in India to provide fully automated electronic trading and the first with an electronic limit order book to trade derivatives and ETFs.

Since its inception, its focus on modern trading systems has delivered to investors a securities market that's efficient, transparent, and growing in popularity.

The exchange supports more than 2,500 Very Small Aperture Terminals (VSAT), making the NSE the largest private wide-area network in the country.

Ashishkumar Chauhan is the Managing Director and CEO of the exchange. 

Benefits of the NSE

The NSE is a premier marketplace for companies that wish to list on a major exchange. The sheer volume of trading activity and application of automated systems promote greater transparency in trade matching and the settlement process.

This in itself can boost visibility in the market and lift investor confidence. Using cutting-edge technology also allows orders to be filled more efficiently, resulting in greater liquidity and accurate prices.

The Bottom Line

India's National Stock Exchange has grown steadily in value and popularity. It is the largest stock exchange in India, followed by the BSE.

In January 2024, it became the fourth-largest stock market in the world when the combined market capitalization of it and the BSE reached $4.33 trillion.