What is a Stock Exchange?
A common platform where buyers and sellers come together to transact in stocks
and shares. It may be a physical entity where brokers trade on a physical trading
floor via an "open outcry" system or a virtual environment.
What is electronic trading?
Electronic trading eliminates the need for physical trading floors. Brokers can trade
from their offices, using fully automated screen-based processes. Their workstations
are connected to a Stock Exchange's central computer via satellite using Very Small
Aperture Terminus (VSATs). The orders placed by brokers reach the Exchange's
central computer and are matched electronically.
How many Exchanges are there in India?
The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) are the
country's two leading Exchanges. There are 20 other regional Exchanges, connected
via the Inter-Connected Stock Exchange (ICSE). The BSE and NSE allow nationwide
trading via their VSAT systems.
What is an Index?
An Index is a comprehensive measure of market trends, intended for investors who
are concerned with general stock market price movements. An Index comprises
stocks that have large liquidity and market capitalisation. Each stock is given a
weightage in the Index equivalent to its market capitalisation. At the NSE, the
capitalisation of NIFTY (fifty selected stocks) is taken as a base capitalisation, with
the value set at 1000. Similarly, BSE Sensitive Index or Sensex comprises 30
selected stocks. The Index value compares the day's market capitalisation vis-a-vis
base capitalisation and indicates how prices in general have moved over a period of
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