What is NSE - National Stock Exchange of India

NSE stands for National Stock Exchange. It is India’s leading stock exchange, providing a platform for electronic trading of securities while ensuring transparency, liquidity, and efficiency in the financial markets.

Established in 1992, NSE’s purpose was to stay committed to improving the financial well-being of people.  Since its inception, the NSE has been headquartered in Mumbai, along with its regional offices in Chennai, New Delhi, and Kolkata. 

With its roots in India and a vision that spans the globe, the National Stock Exchange changed the face of Indian trading in 1994 by introducing a screen-based or electronic trading platform, which set new benchmarks for safety, reliability, and transparency. 

Since its inception, NSE’s ongoing commitment to technological excellence and innovation has helped it build a trusted and efficient market ecosystem that fuels investor confidence and contributes significantly to India’s economic growth.

Key Features of NSE

There are several features of NSE  that make it one of the most trusted and efficient stock exchanges in India. Let us take a look at some of the core features now:

• Electronic trading platform: The National Stock Exchange of India employs a fully electronic and automated trading platform, known as the National Exchange for Automated Trading (NEAT), which facilitates equitable and transparent price determination, speed, and accessibility.  

• Order-driven market: The NSE uses an order-driven trading system, which is different from a quote-driven market, which increases the transparency, as the prices are set by actual demand and supply. In this system, trades happen by directly matching the buy and sell orders, without needing market makers. 

• Regulatory framework: The NSE needs to follow the rules and regulations of SEBI (Securities and Exchange Board of India) and adhere to the strict rules set by SEBI in order to protect its investors.

• Financial instruments: In the National Stock Exchange, investors are provided with a plethora of choices to choose their financial instruments from, as it not only facilitates stock trading but also various other instruments from the capital market (listing and trading of equities), fixed income securities, and the derivatives market. 

• Benchmark Indices: In NSE, the benchmark index is the NIFTY 50, which tells us how the top 50 listed companies are performing. It also has sectoral indices (like banking, IT), which track the performance of the top 50 companies of that particular industry. 

History and Milestones of NSE

The NSE was founded in 1992 and officially recognized as a stock exchange by SEBI in April 1993. It began operations in 1994, initially launching the wholesale debt market, followed by the introduction of the cash market segment.

Since then, NSE has come a long way, introducing many ‘firsts’ in the Indian financial market. Let us look at those key moments below that define the NSE’s legacy.

• 1993 - 1994: NSE launched both the equity and wholesale debt market segments and introduced India’s first electronic or screen-based trading system, marking a major step toward modernization
  
  

• 1995 - 1996: The NIFTY 50 Index was introduced, laying the foundation for benchmark index trading in India.
  
  

• 1997 - 1998: NSE partnered with CRISIL to establish NSE Indices Limited (formerly India Index Services & Products Ltd) for managing and developing market indices.
  
  

• 2000 - 2001: Index options trading was launched based on the NIFTY 50 Index (then known as S&P CNX NIFTY), expanding the derivatives market.
  
  

• 2001 - 2002: NSE began facilitating Exchange Traded Fund (ETF) listings, enabling broader access to index-based investments.
  
  

• 2004 - 2005: Derivatives trading expanded further with the introduction of NIFTY Bank Index futures and options.
  
  

• 2007 - 2008: NSE became the first Indian exchange to offer trading in Currency Futures, introduced the Securities Lending and Borrowing Scheme (SLBS), and launched the NOW platform for web-based trading.
  
  

• 2008 - 2009: The Mutual Fund Service System (MFSS) was introduced to streamline mutual fund transactions on a single platform.
  
  

• 2009 - 2010: Trading in Currency Options was introduced, enhancing hedging tools for investors and businesses.
  
  

• 2010 - 2011: NSE enabled trading in index futures and options based on global indices like the S&P 500 and Dow Jones, bringing global exposure to Indian investors.
  
  

• 2012 - 2013: The New Debt Segment (NDS) was launched to broaden participation in the debt market.
  
  

• 2013 - 2014: NSE introduced the NMF-II mutual fund platform, the NBF II segment for interest rate futures, and launched futures on the India VIX Index.
  
  

• 2014 - 2015: A Memorandum of Understanding was signed with the London Stock Exchange Group, and the CNX NIFTY was renamed to NIFTY 50 for brand consistency.
  
  

• 2015 - 2016: NSE launched platforms for issuing sovereign gold bonds and electronic book-building for debt securities, enhancing transparency in fundraising.
  
  

• 2017 - 2018: New indices like the NIFTY SME EMERGE and hybrid indices were introduced, and a strategic MoU was signed with the Colombo Stock Exchange.
  
  

• 2018 - 2019: NSE launched the Commodity Derivatives segment, the goBid app for retail bond investors, introduced weekly options on NIFTY 50, extended derivatives access to US clients, and signed agreements with Nasdaq and the London Stock Exchange Group.
  
  

• 2019 - 2020: NSE EMERGE crossed 200 SME listings, its Commodities Segment gained CBDT recognition, and Interest Rate Options on Government of India bonds were launched.
  
  

• 2021 -2022: NSE rolled out the cloud-based NSE Data Room, introduced weekly USD-INR futures, celebrated 25 years of NIFTY 50 and 20 years of derivatives, launched the Transportation & Logistics Index, opened its first international exchange at IFSC, and introduced Nifty SDL bond indices.
  
  

• 2022 - 2023: NSE achieved the milestone of becoming the world’s largest derivatives exchange by the number of contracts traded.
  
  

• 2023 - 2024: GIFT Nifty trading commenced at NSE IFSC Exchange (NSE IX), and the first company was listed on the NSE Social Stock Exchange.

How Does NSE Work

Trading on the National Stock Exchange (NSE) happens through a computerized system, without the interference from the middlemen, like market makers. 

Here, the investors place their buy or sell orders online, and these orders are electronically matched based on price. This means, when a market order is placed, the system finds a matching limit order to complete the trade. Since all trades go through this automated platform and are publicly visible, it creates a fair and open trading environment. 

Although most investors trade through brokers who offer online access, large institutional investors can place their orders directly using the ‘Direct Market Access’ feature. 

NSE Operating Hours:

The NSE operates on weekdays, with trading sessions from 9:00 AM to 9:08 AM for pre-opening and 9:15 AM to 3:30 PM for regular trading. The exchange remains closed on weekends and certain public holidays.

Functions of NSE

To ensure smooth capital market functioning, the NSE performs key functions like benchmark index creation, price discovery, liquidity enhancement, and more. Below are its major functions.

1)Trading Platform: 

NSE acts as one of the major marketplaces that enables the buying and selling of a wide range of financial instruments, including stocks, bonds, and derivatives, offering a structured and regulated environment for investors. 

2) Benchmark Index Creation: 

The NSE is responsible for managing major indices like the NIFTY 50, which serves as a performance indicator for the economy, and is widely used for investment benchmarking and product development. 

3) Transparent Price Discovery:

By operating an advanced electronic trading system, NSE ensures real-time, unbiased price determination based on market demand and supply, helping investors to identify fair market values. 

4) Risk Mitigation: 

NSE incorporates strong surveillance mechanisms and regulatory frameworks to control market risks, ensuring stability and integrity across all trading activities.

5) Liquidity Enhancement: 

With a vast number of actively traded securities and participants, NSE maintains high liquidity, which allows investors to enter and exit trades with minimal price impact. 

6) Market Regulation and Compliance: 

Operating under the oversight of the Securities and Exchange Board of India (SEBI), NSE helps to enforce trading regulations and promotes ethical conduct among market participants. 

7) Investor Awareness Initiatives: 

NSE regularly hosts various workshops and educational campaigns to raise awareness about financial markets and responsible investing among the general public. 

8) Market Intelligence and Data Analytics: 

The NSE provides vital market information, including real-time data, trends, and insights, assisting traders, analysts, and institutions in making informed decisions. 

Objectives of NSE

The objectives of NSE include enhancing capital formation, ensuring market fairness, and safeguarding investor interests. Below, we have discussed all of its key objectives:

• Efficient capital formation:  One of NSE’s key goals is to offer companies a reliable channel to access funds for growth and expansion.

• Inclusive and equitable market: The exchange strives to maintain an equitable market field where all participants, big or small, can trade in a transparent and unbiased environment.

• Safeguarding investor interests: NSE is committed to upholding investor trust by ensuring that the trades are conducted through a system that prioritizes fairness, clarity, and operational efficiency. 

• Unified national trading network: NSE aims to connect investors and traders across the country through a single and integrated platform, which encourages wider market participation. 

• Market liquidity: By facilitating seamless trading of securities, NSE ensures that the buyers and sellers can transact quickly, which helps to maintain a steady flow of liquidity in the market. 

Market Segments of NSE

NSE operates in multiple market segments like equities, indices, mutual funds, and more. Let’s check all the NSE market segments in India.

1) Equities: 

NSE began trading in the equities (capital market) segment on November 3, 1994, and quickly became the largest stock exchange in India by trading volume within a year. This segment offers real-time quotes, key statistics, and detailed information on listed companies, trading processes, clearing and settlement systems, risk management, and overall market performance. 

2) Indices: 

An index reflects the price movements of products in financial, commodity, or other markets. The stock market indexes represent the overall market or a specific sector by tracking a selected group of stocks. Accordingly, in finance, indices are used to track the performance of stocks, bonds, or other investments, and these indices are calculated using a base period and a base value for comparison. 

3) Emerge: 

The NSE’s EMERGE is a dedicated platform that connects emerging companies with informed investors, and it offers growing businesses the opportunity to raise capital. With its streamlined processes, EMERGE supports companies in their transition to becoming publicly listed entities. 

4) Mutual Fund:

Investors can now subscribe to or redeem mutual fund units through NSE’s Mutual Fund Service System (MFSS), an online platform that allows eligible members to place buy or sell orders on behalf of investors. MFSS supports both physical and demat modes, which is available from 9 am to 3 pm, and these orders are settled individually on a T+1 working day basis. 

5) Equity Derivatives:

The National Stock Exchange (NSE) began derivatives trading on June 12, 2000, with the launch of index futures. It now offers F&O contracts on five key indices, namely, NIFTY 50, NIFTY BANK, NIFTY Financial Services, NIFTY Midcap Select, and NIFTY Nest 50, along with over 210 securities. 

6) Currency Derivatives: 

NSE was the first exchange to receive SEBI’s approval to launch a currency derivatives segment. It began with currency futures on USD-INR and later expanded to include other major currencies like the Euro, Pound Sterling, and Japanese Yen. Additionally, currency options were also introduced along with the cross-currency F&O contracts, such as EUR-USD, GBP-USD, and USD-JPY, offering a broader range of trading opportunities. 

7) Commodity Derivatives: 

The NSE began trading in Commodity Derivatives with the launch of bullion futures in 2018. These markets serve as vital tools for gauging market sentiment and managing price volatility in raw materials. By using regulated commodity F&Os, businesses can hedge against risks and improve overall performance. 

8) Interest Rate Derivatives: 

Interest Rate Derivatives (IRD) are financial contracts whose value is linked to interest rates or related instruments. Interest Rate Futures (IRF) are traded on recognized exchanges, which involve buying and selling of notional interest-bearing instruments, like government securities, treasury bills, or MIBOR, at a future date. Furthermore, Interest Rate Options (IRO) are contracts based on rupee interest rates, currently available on Government of India securities. 

9) Fixed Income and Debt:

This segment enables trading in fixed-income instruments like bonds, treasury bills, and government securities. It also offers institutional investors a reliable platform for buying and selling debt instruments, promoting liquidity, and transparent price discovery. 

10) Initial Public Offering (IPO):

The primary market allows companies to raise fresh capital by issuing securities through methods, as IPOs, rights issues, or private placements. IPO means a process where a company offers shares to the public for the first time, creates a direct relationship between the company and investors. Here, the funds raised become the company’s share capital, which provides long-term financial support. 

Major Indices of NSE

The NSE tracks the performance of the stock market through various key indices that reflect different segments of the economy. Let us look at some of the major indices now. 

1) NIFTY 50:

Considered the flagship index of NSE, NIFTY 50 showcases the performance of the top 50 leading companies listed on the exchange from various industries. It acts as a reliable measure of market sentiment and overall economic health.

2) NIFTY 100:

This index captures the performance of the top 100 companies based on market capitalization on the NSE. It includes the NIFTY 50 and the next 50, giving a more comprehensive view of the Indian equity landscape.

3) NIFTY Next 50:

Made up of companies ranked 51 to 100 by market capitalization, the NIFTY Next 50 is known for tracking high-potential firms that often go on to join the NIFTY 50, offering a glimpse into the future leaders of the stock market.

4) NIFTY Midcap 50:

Focused on 50 actively traded mid-sized companies, this index reflects the performance of mid-tier stocks. It helps investors assess opportunities within the midcap segment of the Indian equity market.

5) NIFTY Smallcap 250:

This index includes 250 smaller companies that are rapidly growing and gaining investor interest. It allows for evaluation of the small-cap sector's trends and potential for expansion.

6) India VIX:

The India Volatility Index (India VIX) represents expected volatility in the market based on NIFTY 50 options. Higher readings point to greater market uncertainty and short-term risks, making it an important tool for risk assessment.

7) Other NSE Indices:

Apart from the major indices, NSE also offers a variety of theme-based and sector-specific indices. These track areas, such as ESG factors, investment strategies, asset classes, and fixed-income products, help investors diversify and customize their portfolios.

Top Companies Listed on NSE

The NSE is a home to several leading companies that play a major role in shaping India’s economy. The following are among the most prominent firms that are listed on the exchange according to their Market Capitalisation. 

(The above data is recorded as of 15th May, 2025).

Conclusion

The National Stock Exchange has transformed the Indian capital market with its emphasis on transparency, speed, and investor accessibility. From equities to derivatives and fixed-income products, the exchange has built a comprehensive framework that supports all kinds of market participants. 

Through its consistent efforts to modernize and democratize access to financial markets, the NSE has redefined how India trades and invests!