Launched in 1994, the National Stock Exchange of India (NSE trading centre) is the principal stock exchange in India. As of May 2021, the NSE had a total market capitalisation of more than USD 3 trillion, making it the 10th largest stock exchange in the world. This guide will explain how to start NSE trading, with information on the online trading platforms, trading hours and some strategies. Finally, we will offer trading tips to maximise your earning potential using the NSE. See below for a list of our top brokers for National Stock Exchange of India (NSE) trading.
What Is The NSE Of India?
The NSE trading centre is India’s largest financial market and premier marketplace for companies preparing to list on a major exchange. It was the country’s first electronic exchange to trade derivatives and exchange-traded funds (ETFs) and provide a fully automated screen-based electronic trading system. As of January 2021, the NSE was the world’s largest derivatives exchange by trading volume. It is ranked 4th in the world in equity trading volume.
The NSE trading market’s products are organised into three asset classes: the capital market for the listing and trading of equities, the fixed income securities market and the derivatives market. The NSE’s products offer trading, investment, clearing and settlement services in the following sectors:
- Mutual fund
- Interest rate futures
- Currency derivatives
- Initial public offerings
- Commodity derivatives
- Exchange-traded funds
- Debt (corporate bonds)
- Security lending & borrowing
- Equity derivatives (including Global Indices like FTSE, Dow Jones, and S&P 500)
The NSE trading centre’s flagship index is the NIFTY 50, which tracks the largest assets in the Indian equity market. It is used extensively by investors in India and around the world. The NSE’s business model comprises exchange listings, trading services, indices, market data feeds and financial education services.
A Brief History
The National Stock Exchange of India was incorporated in 1992 in Mumbai by a group of financial institutions, much to the dislike of the Indian government. The NSE trading centre was created to encourage transparency in the Indian equity markets so that trading memberships could be extended beyond a group of brokers.
The NSE was first recognised as a stock exchange in April 1993 and began operating in 1994. It was the first exchange in India to offer electronic or screen-based trading, offering easy trading facilities to investors across the country. The NSE was also a key player in the creation of the National Securities Depository Limited (NSDL), which enables investors to securely hold and transfer their shares and bonds online. The NSDL’s security, combined with NSE’s transparency, low transaction prices and efficiency make the Indian stock market an attractive option for local and foreign investors.
The NSE trading centre is now ranked as the largest stock exchange in India in terms of total and average daily turnover for equity shares every year since 1995.
However, unlike countries like the US, the corporate sector in India only accounts for 12-14% of the country’s national GDP (as of October 2016). Only 4,000 listed companies trade on the NSE, accounting for only around 4% of the Indian economy. According to a 2010 Bimal Jalan Committee report, barely 1.3% of India’s population invested in the stock market.
In January 2021, NSE trading markets were launched that featured weekly futures and options (F&O) trading contracts on forex pairs, including EUR/INR, GBP/INR and JPY/INR. The exchange also launched its first commodity options trading contracts on gold and silver.
NSE Corporate Structure
The NSE Group has grown over the past 25 years, establishing various subsidiaries to provide additional product offerings beyond the traditional listing and trading services:
The NSE trading centre has developed a variety of learning and training opportunities. NSE Academy Limited is a subsidiary of NSE Investments Limited and was set up to promote financial literacy. It has collaborated with several universities in India to offer MBA and BBA courses. The NSE has also created mock market simulator trading software called NSE Learn to Trade (NLT). The software helps users to develop and practice their investment, trading and portfolio management skills.
Under its Certification in Financial Markets (NCFM) programs, the NSE trading group conducts online exams for beginners as well as advanced traders. Currently, there are 46 certifiable modules listed on the NSE website, which cover several sectors across financial and capital markets.
Since August 2009, the NSE trading centre has offered a short-term course called NSE Certified Capital Market Professional (NCCMP). The course is a 100-hour program conducted over three or four months. During the course, students will receive theoretical and practical training in capital market-related subjects such as equity markets, debt markets, technical analysis and fundamental analysis.
- NSE Investments – This company was formed to make and/or hold strategic investments in equity shares and/or other securities. It explores investment opportunities in technology, indices, education, private marketplaces & exchanges, payments, trading platforms and many more.
- NSE Clearing – As the first clearing corporation to be established in India, NSE Clearing Limited is a wholly-owned subsidiary responsible for the clearing and settlement of all trades executed on the NSE trading markets. It also deals with deposit and collateral management and risk management functions. It also introduced a settlement guarantee before it became a regulatory requirement. Its objectives are to bring and sustain confidence in the clearing and settlement of securities, provide a counter-party risk guarantee and operate a tight risk containment system.
- NSE Data & Analytics – Formerly known as DotEx International Limited, this is a wholly-owned subsidiary of NSE that was set up solely to provide data and info-vending products, including online streaming data feed, snapshot data feed, end of day data, volume data and historical and corporate data.
- NSE Foundation – The NSE Foundation undertakes the Corporate Social Responsibility activities of the NSE trading centre of India with a vision of enhancing the lives of underprivileged and marginalised communities. The NSE Foundation focuses its activities in primary education, elderly care and sanitation and safe drinking water
- NSEIT – NSEIT is a global technology enterprise, focussing on delivering excellence in a digital environment in banking, insurance, capital market ecosystems and online exams.
- NSE IFSC – This is a proposed new exchange that applied to SEBI for in-principal approval to establish an international exchange in Gujarat International Finance Tech City – International Financial Service Centre (GIFT IFSC). It is intended to grow the financial market and bring capital to India. Stock exchanges in GIFT IFSC will be allowed to offer trading in securities in any currency other than the Indian rupee and equity shares of companies incorporated outside India. Trading days would also be longer than currently permitted in India.
Since September 2016, the NSE trading centre has owned and managed a portfolio of 67 indices under the NIFTY brand. NIFTY indices are broad-market indices that are used as benchmarks for products trading on NSE and served as the benchmark index for 38 ETFs listed in India and 12 ETFs listed abroad.
The NIFTY 50 is an index of 50 of the largest companies listed in the National Stock Exchange of India. It is widely used by traders to assess the performance of the stock market as a whole because it covers stocks across 14 different sectors of the economy. It represents about 66% of the free-float market capitalization of the stocks listed on the NSE trading centre, as of March 2019.
On top of the well-known NIFTY 50 index there exist other important indices within the NIFTY umbrella, including:
- NIFTY Next 50: represents 50 companies from NIFTY 100, excluding the NIFTY 50 companies. This index represents 10% of the free-float market capitalisation of the stocks listed on the NSE trading markets.
- NIFTY 100 Index: NIFTY 100 is a diversified 100 stock index representing major sectors of the economy. It tracks the behaviour of the combined portfolio of two indices: the NIFTY 50 and NIFTY Next 50, making up about 76% of the free-float market capitalisation of the stocks listed on the NSE.
- NIFTY 200 Index: includes all companies as part of NIFTY 100 and NIFTY Full Midcap 100 index.
- NIFTY 500 Index: this index tracks the 500 largest stocks on the NSE trading markets.
- NIFTY 500 Multicap 50:25:25 Index: This aims to measure the performance of large, mid and small market capitalisation companies with target weights assigned to each size segment. It includes all companies that are part of the NIFTY 500 index but the total weight of each of these three segments is fixed at 50%, 25% and 25%, respectively, at every quarterly rebalance date rather than being based on the total free-float market capitalisation of all stocks falling within that size segment.
NSE has a pan-India, high-speed network that is supported by more than 181,500 terminals. Its trading platforms include:
- National Exchange for Automated Trading (NEAT) – NEAT is a screen-based trading system whose scalability allows it to support higher trading volumes per day and maintain high uptime records and low-latency levels for trade orders from terminals. Trading data on NEAT is released almost instantly to its users. NEAT+ provides a unified interface for members trading in multiple markets on the NSE.
- Non-NEAT – NSE trading members are offered the option to customise the trading platform according to their requirements. Developing a Non-NEAT front-end through a computer-to-computer link (CTCL) which allows members to use their own trading software for trading on the NSE. Users can also procure Non-NEAT front-end software solutions from various vendors or application service providers. For developing Non-NEAT front-end apps, members need to refer to trading protocol documents and guides provided on the NSE website.
- NSE NOW – NSE Now is one of the country’s most widely used platforms. The trading software is available as a PC desktop client, web terminal or mobile app. It is licensed to more than 100 brokers and used by millions of traders. Its attractive features include a robust risk management system, advanced graphs and charts and both day and net-wise trading reports.
- NSE EMERGE – Launched in September 2012, NSE EMERGE is a trading platform for small and medium-sized businesses (SMEs) and startup firms in India. The benefit of this new initiative is that these new companies can get listed on the NSE trading centre without an initial public offering (IPO), meaning they can connect with investors who can help them raise funds. The 200th company was listed on NSE EMERGE in August 2019.
The NSE is determined to provide members with a robust platform for issue-free trading. To ensure this, the NSE conducts contingency drills or mock trading sessions to test its recovery and response mechanisms. The NSE advises that the large-scale participation of members is key to the success of the testing session. To allow participants time to plan, the NSE provides a mock trading schedule, of which the 2021 calendar is currently available.
NSE Vs BSE
The Bombay Stock Exchange (BSE) is another Indian stock exchange, located in Mumbai. It was established in 1875, making it older than the NSE and South Asia’s second oldest stock exchange. It is the 9th largest stock exchange in the world and was the first to be recognised by the Indian Government under the Securities Contracts Regulation Act.
However, with a 98% market share, the NSE trading centre is India’s leading stock exchange. The BSE has a 2% share despite being the older of the two. The BSE promotes trading in equity, debt instruments, mutual funds, currencies and derivatives while the NSE promotes trading equity, equity derivatives, debt and currency derivatives segments.
The NSE was forced to halt trading across brokers like Zerodha in February 2021 after a glitch froze stock and index prices. Trading was halted after prices stopped updating and all open orders were cancelled by the exchange. Its rival, the BSE, continued to function without any trading issues. Regular NSE trading resumed four hours later and the exchange revised its trading hours as a result. However, technology glitches have affected other exchanges, including the US’ Nasdaq.
The National Stock Exchange of India uses the India Standard Time (IST) timezone, which does not observe daylight saving time. The MIC code for the India National Stock Exchange is XNSE. This MIC may encompass multiple trading venues with distinct hours, trading holidays, rules and securities.
The NSE trading window is 6 hours 15 minutes per day. The NSE does not have pre-market or after-hours trading. The NSE’s trading hours are listed below.
- 09:00 to 09:08 IST (pre-open session, with random closure in the last 1 minute)
- 09:15 to 15:30 IST (regular trading session)
- 15:40 to 16:00 IST (closing session)
Trading on the NSE is open Monday to Friday and is not available on Saturday and Sunday nor public holidays, as specified on the NSE website.
However, market timings do vary. For example, Securities Lending & Borrowing and Currency Derivatives markets are open for an extra hour, until 17:00 IST, while commodity derivatives close at 23:30 IST. Ultimately, the NSE trading hours and holidays differ between the different markets, such as equity trading, futures & options (F&O) and others, so it is best to check the NSE website in advance.
NSE Trading Holidays
The number of trading days in a year can vary based on the number of weekends and national holidays. Online calculators can help you figure out how many trading days there are in 2021.
Zerodha, India’s biggest stockbroker, posts a list of trading holidays for every calendar year for stock exchanges in India, including the NSE and the BSE. It has provided trading holiday calendars for 2019, 2020 and 2021 as the days change every year. The NSE is normally closed on these holidays.
However, Muhurat trading is the auspicious trading hour in the Indian stock market on Diwali. It is usually announced by exchanges like the NSE trading centre who notify investors of the non-scheduled trading hour. As Diwali marks the beginning of a New Year, Muhurat trading is believed to bring wealth and prosperity for the year ahead. In 2020, Muhurat trading was on 14 November from 18:00 IST onward.
Exceptions can be made. For example, the days in the NSE trading week were extended on Saturday 1 February 2020, the day on which the Budget 2020 was presented by India’s Finance Minister, the NSE remained open when it would normally have been closed.
NSE Trading Rules & Regulation
The Securities and Exchange Board of India (SEBI) is the regulatory authority and principal regulator for Stock Exchanges in India, including the NSE. SEBI’s primary functions include protecting investor interests, and promoting and regulating the Indian securities markets. As an entity regulated by SEBI, the NSE undergoes regular inspections to ensure compliance and must set out rules and regulations to govern the securities market. These extend to member registration, securities listing, transaction monitoring, compliance by trading members to SEBI regulations and investor protection.
Listing of securities can be done in either Capital Market or Wholesale Debt Market. There are some key requirements that companies must meet in their National Stock Exchange of India trading application. Some of the important registration standards for NSE trading include:
- Companies must be registered as a Public Company under the Companies Act 1956 or Companies Act 2013.
- Companies must be at least 3 years old with 2 years of positive net worth.
- Post issue paid-up capital should not be more than 25 crore rupees (250 million rupees)
- Company profiles on management and projects undertaken are required
- Certified copies of documents including 3 years of annual reports and Memorandum & Articles of Association are required
- A 5-year projected business plan, including balance sheet, P&L, and cashflow
However, in September 2012, a new NSE trading platform was launched. NSE EMERGE is an initiative for small and medium-sized businesses (SMEs) and startup firms in India.
The NSE trading centre has introduced various eligibility requirements that its trading members must meet to trade on the exchange. All trading members of the NSE must register themselves with the Securities and Exchange Board before commencing operations. Along with the relevant trading member fees and security deposit, the applicant must adhere to various rules:
- Individuals (or sole proprietors) must be Indian citizens over the age of 21 and should have at least 2 years experience as a partner with, or an authorised assistant, clerk, remisier or apprentice to, an existing trading member.
- No person can be admitted to the trading members list of the NSE unless they have passed the Certification Programme conducted by the NSE for the specific trading segment of the exchange.
- LLPs must be formed and registered under the Limited Liability Partnership Act, 2008.
- Designated Partners of registered Partnership Firms or LLPs should have a minimum of 2 years experience in an activity related to dealing in securities, portfolio management or in financial services or brokerage.
- Trading membership is restricted to one trading segment.
- Members must be free from any bankruptcy or criminal proceedings.
How To Start Day Trading On The NSE
Choose A Broker
The first thing you need to do before you start day trading on the NSE is to choose your broker. A broker will facilitate your trades and, if you choose the right one for you, provide you with assistance and tools to generate profits. However, as there are many for you to choose from, we have listed some things to consider to help speed things up when looking for the top brokers for National Stock Exchange of India trading.
- Costs – Intraday NSE trading involves making multiple trades within one day, meaning the commission charges can quickly build up and cut into your profits. Therefore, you should look for a broker whose fees are transparent and competitive. Also be sure to check out minimum account requirements, including deposit/withdrawal fees and transaction expenses.
- Trading Platform – Day trading on the NSE requires a lot of time and dedication, meaning you will spend a decent amount of time on either your web-based or app trading platform. A broker that offers mobile trading will give you extra flexibility but make sure it provides you with all the charts, graphs and trading analysis tools you require.
- Features – Consider what additional features you would benefit from, such as news feeds that will give you NSE trading updates and today’s news.
- Customer service – What kind of support does your broker provide? There is nothing more frustrating than when you have a problem that cannot be solved without help. Time is money when intraday trading, so check out broker reviews to make sure you are opening a trading account with a responsive broker.
- Regulation – Do your research and make sure that your broker is properly regulated and has a good reputation. In December 2019, the NSE and BSE suspended Karvy Stock Broking Ltd’s trading license for all segments due to non-compliance with exchange and SEBI rules. The broker had not segregated broker securities from client securities, using the latter for fundraising.
Having a well-thought-out strategy can make a huge difference to the profit you take home at the end of an NSE trading day. In today’s world of stock charts and market data, using technical analysis effectively is key. The right chart will make vital information like historical price data clearer so you can better interpret market patterns, allowing you to better predict future price movements.
Investors often follow FII (foreign institutional investor’s) and DII (domestic institutional investor’s) trading activity to help inform their investment decisions. FIIs and DIIs are key players in the market, maintaining market liquidity and, in recent years, changes in ownership of Indian equities have occurred where control has shifted from FIIs to DIIs. FIIs look at the global market while DIIs are essential for strengthening the domestic Indian market where participation is low.
As part of its Certification and Programs offering, NSE trading offers various courses enabling students to learn how to practically implement various strategies, including live trading strategies and intraday trading strategies in the equity, forex and commodities markets. The trading strategy course fees typically range between INR 15,000 and 20,000.
Choose A Stock
A key aspect of NSE trading is screening the stocks to trade to determine which of the thousands of companies will provide maximum profit potential. The decision between choosing popular stocks versus IPOs is certainly a big one. Things to consider when choosing stocks are volume (the total number of shares being traded within a certain time), volatility (how risky and unpredictable are they) and how you can apply these. The NSE publishes a list of its top 20 gainers and losers on any index on its website and TradingView. These currently include Mahindra & Mahindra Limited (M&M) and Reliance Industries Limited (Reliance). It is also possible to see which companies’ stocks and shares are trading at a 52-week low.
NSE Trading Tips
The NSE trading centre offers a free F&O virtual trading account and investment interface called NSE Paathshaala. This allows traders to practise their strategies in real-time market values and is particularly useful for beginners who want to try out virtual trading before parting with actual money. Traders are given a 5 lakhs (500,000 rupees) limit to practice with. The portal uses the NSE Now (NEAT On Web) trading platform, which is similar to the Zerodha interface.
The latest news can massively impact NSE indices’ price movements. Successful traders need to keep updated with the news today as it can give them a competitive edge ahead of the next trading day. NSE trading WhatsApp and Telegram channels and groups are also a good source of news, calls, ideas and stock market tips for tomorrow for every type of trading on NSE, whether F&O or intraday.
NSE Insider Trading Data
NSE (and BSE) publish insider trading data on their websites. This data can be very valuable for stock market investors as company insiders, such as promotors and top management, are more exposed to the ins and outs of the company’s plans. Insider trading activity can offer clues on how companies will perform and so traders should keep an eye on what company insiders are doing with their shares. So long as the information has been made public, this is not considered to be illegal.
If you intend to trade in F&Os, it’s important to know that the NSE trading centre, like many other stock exchanges, imposes a securities ban at certain times. During the ban periods, traders are not permitted to open new positions in stocks under the ban but they may reduce their position. The trading ban prevents excessive speculative activity and is imposed when the aggregate open interest of a stock crosses 95% of the market-wide position limit.
As markets and instruments change and evolve, traders must learn to adapt at the same time. Fortunately, there are a plethora of resources to help you improve your skills and knowledge. As mentioned, the NSE Academy provides its own courses and programs but there are others out there for you to use. Books and ebooks on NSE trading are handy tools. Similarly, downloadable PDFs can guide you through options trading, for example, and on various price charts on the NSE.
Algo (algorithmic) trading or auto robot trading has become increasingly popular in India and is available on the NSE. Automated trading can take out the emotion of investing and reduce the risk of making irrational decisions that could ultimately damage your profits. Algo trading automates trading via APIs so you do not have to sit and monitor the markets all the time.
We would always recommend investors keep a trading journal as a way of monitoring and improving their NSE trading performance. You can keep a record of your journal in an Excel spreadsheet, making a note of the following:
- Position size
- Entry & exit position
- Date of purchase & sale
- Reason for making the trade
With all this information in one place, you can better analyse your performance and identify any trading problems today, rather than tomorrow.
Final Word On NSE Trading
The NSE trading centre is India’s leading stock exchange. It has always been a pioneer in Indian financial markets, being the first electronic order book to trade derivatives and ETFs. It consistently aims to assess and improve its trading platforms, systems and operations and continues to introduce helpful features for traders. It is ranked 4th in the world by equity trading volume. The NIFTY indices continue to house some of the largest Indian companies and will continue to change. If you want to be successful when NSE trading, you should follow the tips and advice outlined in this guide, whilst also investigating the various online resources available.
For a full list of top NSE brokers, see here.
What Are The Main Indices Of The NSE?
The NIFTY 50 lists 50 of the largest companies on the National Stock Exchange of India. Many investors in India use it to gauge the stock market as a whole, as it covers companies across 14 different sectors and represents about 66% of the free-float market capitalization of the stocks listed on NSE. The NIFTY 100 represents the top 100 companies and is a combined portfolio of the NIFTY 50 and NIFTY Next 50. The NIFTY 500 Index tracks the 500 largest stocks on the NSE trading markets.
What Segments Are Offered By The NSE?
The NSE offers the following segments: Capital Market, Equity Derivatives, Currency Derivatives /IRF and Debt.
Is the NSE Of India Open For Weekend Trading?
No, NSE trading is not open on Saturday or Sunday. Trading hours are only open Monday to Friday, excluding any additional trading holidays. However, Muhurat trading means investors can trade on Diwali for one hour.
Can I Trade On The NSE Without A Broker?
Generally, retail investors cannot trade on the NSE without a broker. You need a trading account with a regular or discount brokerage such as Zerodha. It was reported in 2020 that SEBI was considering allowing direct market access (DMA) to retail investors. However, some investors have reported trading with Finvasia, which allows users to trade in all major exchanges like the NSE with zero brokerage.
Which Is Better, The NSE Or BSE?
While the National Stock Exchange (NSE) is the biggest in India, the Bombay Stock Exchange (BSE) is the oldest. The NSE has more trading volume, meaning more buyers and sellers for stocks are available. The NSE trading centre also has more liquidity than the BSE. However, the BSE has a bigger list of stocks available. The BSE is great for beginners while the NSE is more suited to experienced day traders, particularly due to its better software for high-risk transactions.