Stocks are classified in NSE and BSE in different groups or series based on some qualitative and quantitative parameters. These parameters include market capitalization, settlement cycle, trading liquidity, etc. Stocks are categorized into different segments to distinguish them from each other. This categorization enables traders to know the risk they have undertaken by investing in these stocks.
Dividing stocks into different groups to streamline transactions and help traders choose stocks effectively is known as the categorization of stocks.
Different groups on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) signify the classification of companies. This classification is based on their market capitalization, trading volumes, and other criteria. These groups include Nifty 50, Sensex, BSE Midcap, BSE Smallcap, and more.
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EQ, IQ, BL, GC, IL, BT and BE are the series of NSE stocks. These suffixes help traders understand which series of stocks they should trade.
The EQ series on the NSE represents equity transactions. It allows investors to engage in equity delivery and intraday trading for potential profits and investment opportunities.
This series works to trade bulk stock orders with at least five lakh stocks in one bundle. Else the stock value should be Rs. 5 crore. This BL series transaction is executed in a single instance through the 'Block Deal Window'.
The BE series, short for 'Book Entry,' is designed to facilitate equity delivery, T segment trading, and Trade for trade. In this series, traders are not permitted to engage in intraday trading; they can only trade equity deliveries.
This series is for small investors who wish to sell physical shares. The maximum sell limit for the BT series is 500 stocks.
This series is for trading treasury bills and government securities.
IL series is for foreign institutional investors (FII). It allows them to trade stocks in companies whose maximum limit is not reached by FII.
Only Qualified Foreign Investors (QFI) can trade the stocks in the IQ series without the depositor's approval.
Group A, T, M, Z, and B are some of the important classification groups of BSE.
A company is shortlisted for Group A if,
These group stocks are mostly liquid and have high trading volumes. The settlement cycle of group A stock is done by a rolling settlement process.
The criteria on which stocks are included in Group T are:
Stocks of small or medium companies fall under Group M. Turnover of these companies is Rs. 5 crores or fewer, and they have low trading volume, which means low liquidity.
Companies that fail to satisfy the exchange's listing requirement and cannot redress their investor's complaints are included in this category.
All stocks not in the above group get categories in Group B. This group has stocks with an average trading volume and a rolling settlement process.
Before venturing into the stock market, it is crucial for traders to grasp the stock categorisation on NSE and BSE. These categorisations help determine which stocks are suitable to invest in day trading and which ones are best for long-term investments. Acquainting oneself with these categories is a vital step in making informed investment decisions.
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