NSE or National Stock Exchange is the leading stock exchange in India located in Mumbai. It was the country’s first demutualised electronic exchange featuring a modern, fully automated screen based electronic trading that provides an easy trading facility for investors spread across the country.
It has a market capitalisation of US$1.65 Trillion. NSE India is the world’s 12th largest stock exchange which is used extensively by Indian and global investors as a measurement of Indian capital market.
NSE India was established in 1992 by the directives of Indian government by a group of diversified shareholders that include key domestic investors like Life Insurance Corporation of India, State Bank of India, IFCI Limited IDFC Limited and Stock Holding Corporation of India Limited and global investors like Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius Limited, Aranda Investments (Mauritius) Pte Limited and PI Opportunities Fund as a measure to bring transparency to the Indian capital market.
NSE Nifty or Nifty 50 is the benchmark stock market index of Indian equity market. Nifty 50 comprises of 50 Indian companies covering 22 sectors of Indian economy like financial services and industrial manufacturing. A free float market capitalization weighted index, NSE Nifty has come up as the single largest financial product of India with a base value of 1000, and a base capital of Rs 2.06 trillion.
The ecosystem includes exchange-traded futures and options (at NSE in India and at SGX and CME abroad), exchange traded funds (onshore and offshore), OTC derivatives (mostly offshore) and other index funds.
NSE margin is a comprehensive risk management tool for the derivative tool of NSE F&O i.e. Future and options. Future and options are the two of the most popular derivative instruments traded in the stock market. The Futures contract allows one to buy or sell shares at a certain price in the future, the options contract gives one the right, but not an obligation to buy (through a call option) or sell (through a put option) the underlying script at a specified date and at a specified price.
Since there is a certain level of uncertainty in the prices of both the options, NSE has introduced a portfolio based system for the purpose of margining. What NSE margin does is it allows the buyer to buy a certain amount of shares at a part of the total amount of the shares. This initial amount to buy shares is called margin. Basically, allowing the buyers bring money and sellers bring shares to complete their obligations even though the prices of the shares have moved down or up.