Market

1. The U.S. stock market and the Indian stock market

The U.S. stock market and the Indian stock market are different in many ways. As investors, understanding these differences is very important in determining how we diversify our investment portfolio. The U.S. stock market has always been a mystery for Indian investors, but U.S. investment has been publicized many times, for example, "The performance of the U.S. index over the past decade is 8-15% higher than that of the Indian market." However, past performance does not guarantee future returns. For the US stock market, we use the Dow Jones Industrial Average, and for the Indian market, we use BSE Sensex.

2. The difference between the U.S. stock market and the Indian stock market

1. Market value. It shows the size of the head office in these countries. Get the stock in the stock market and multiply it by the current price. India has climbed two ranks in 2020, ranking eighth among the world's largest stock markets (as of December 2020). The country's market value exceeded the 2.5 trillion U.S. dollar mark. The US stock market is at the top of the list, and the New York Stock Exchange alone has a huge market value of more than $25 trillion (as of March 2020).

2. Listed securities. In India, as of October 2020, the total number of companies listed on the country’s NSE, BSE and other stock exchanges exceeds 7,400. In the U.S. stock market, approximately 6,000 companies are listed on the Nasdaq and the New York Stock Exchange.

3. Performance. In the past ten years, DJI has created a compound annual rate of return of 9.75%, and Sensex has created a return of 9.70% in the past ten years. In the first five years of this decade (2011-2015), the compound annual growth rate of the US stock market was 12.86%, while the compound annual growth rate of the Indian market was 12.11%.

4. Volatile. Volatility is a good indicator of the ups and downs of the market in a certain period of time. This is an important factor because the riskier market will force you to sell ahead of time. In the past ten years, the volatility of DJIA was 3.92% and that of BSE Sensex was 5.06%. Therefore, compared with the US stock market, the Indian market has been more risky in the past.

5. Other global factors. Certain other global factors may involve the development of markets in the economy. In India, the law requires companies to be profitable for three consecutive years before they can go public, which sometimes prevents investors from showing confidence in the new business model. In the United States, the requirements are relatively loose, so investors can easily invest in innovative models around the world. This is a key factor in comparing the two stock markets, as investors may want to keep their portfolio updated with ever-growing opportunities.

1. What is a market holiday in the US stock market?

The so-called market holiday in the US stock market refers to any non-weekend day on which the New York Stock Exchange, Nasdaq or bond markets are closed. Usually, that holiday is similar to Christmas or New Year. During certain holidays or approaching days, the U.S. stock market remains open, while the bond market remains closed or closed early.

Sometimes markets are closed on National Day of Mourning, as the New York Stock Exchange and Nasdaq did in 2018 to commemorate the late President George H.W. Bush. If a given holiday happens to happen on a Saturday, the Friday before it will usually be a market holiday for the US stock market.

Similarly, if the holiday falls on a Sunday, the US stock market will usually be closed on the following Monday. The normal business hours of the New York Stock Exchange and Nasdaq are Monday to Friday from 9:30 a.m. to 4 p.m. Eastern Time. The market is closed on weekends.

2. A complete market holiday for the U.S. stock market in 2021

President Biden signed a bill to designate June 19 (or June Festival) as a federal holiday to commemorate the end of slavery in the United States. However, the US stock market is still open on the previous Friday and the following Monday. June 19th this year is Saturday. Exchanges and other regulators will meet in the next few months to determine whether the June Festival next year and subsequent years will become a market holiday for the US stock market.

Here is the holiday in the U.S. stock market when the New York Stock Exchange, Nasdaq, and bond markets are fully closed in 2021:

January 1, Friday is New Year’s Day; January 18, Monday is Martin Luther King Jr. Day; February 15, Monday is President’s Day; May 31, Monday is Memorial Day; 7 Monday is to commemorate July 4th, Independence Day, which occurs on Sunday; September 6th, Monday is Labor Day; November 25th, Thursday is Thanksgiving; December 24th, Friday is to celebrate Christmas Festival.

1. India's stock exchange

Most of the transactions in the Indian stock market are conducted on its two stock exchanges: Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). BSE was established in 1875. On the other hand, NSE was established in 1992 and started trading in 1994. Both exchanges follow the same trading mechanism, trading hours and settlement process.

Almost all important Indian companies are listed on these two exchanges. BSE is an older stock exchange, but in terms of trading volume, NSE is the largest stock exchange. Therefore, NSE is a more liquid market. In terms of market value, their comparability is approximately US$2.3 trillion. Both exchanges are competing for order flow, thereby reducing costs, improving market efficiency and innovation. The existence of arbitrageurs keeps the prices of the two stock exchanges within a very narrow range.

2. Settlement and trading hours of the Indian Stock Exchange

The stock spot market follows T+2 rolling settlement. This means that any transaction that occurs on Monday will be settled before Wednesday. All transactions on the stock exchange are conducted between 9:55 am and 3:30 pm in Indian Standard Time (Greenwich Mean Time + 5.5 hours) from Monday to Friday. The delivery of stocks must be done in non-physical form, and each exchange has its own clearing house, which assumes all settlement risks as the central counterparty.

Three, India's famous stock index

Two well-known Indian stock indexes are Sensex and Nifty. Sensex is the oldest stock index; it includes the stocks of 30 companies listed on the BSE and accounts for approximately 47% of the index's free float market value. It was created in 1986 and provides time series data after April 1979. Another stock index is Standard & Poor's CNX Nifty; it includes 50 stocks listed on the NSE, accounting for approximately 46.9% of its free float market capitalization. It was founded in 1996 and provides time series data after July 1990.

1. Why do we need stock indexes?

The basic premise of owning a stock index is to make it easy for investors to trade. Imagine a stock market without these categories. It is just an open market. All company stocks listed on the exchange can be purchased. You don’t know which stocks have higher market value, you don’t know which stocks have lower value, and which ones It is a "better" stock. All investors will wander around like headless hunters. This is where the importance of stock indexes manifests. They make it easier for you to trade by grouping them and making them more visible.

2. Owning stock indexes is an important part of stock market investment

1. Group/Sort: Group all company stocks in an organized manner and select them through a certain strategy, which makes it easier to view the best stocks in one place. Sometimes you may just want to see how a certain department performs. For example, in the current era of pandemics sweeping the world and stock markets falling, you may be curious about the performance of the health sector. In the absence of a stock index, you have to find all the pharmaceutical companies individually, put them together and do your own calculations.

2. Evaluate stocks and market performance: Sorting can not only help you select stocks, but also provide you with guidance in the subsequent process. An organized stock index can help you find the answers to the following questions: if a stock performs better than a benchmark stock index, if a stock has a higher risk than other stocks, if it performs better or lower than those listed in the index Of other stocks, whether the stock performs better or worse than other stocks belonging to the industry, and many such issues. Stock indexes are a good way to record the individual and relative performance of stocks.

Stock indexes contain a lot of information about stocks: price history, changes in trading volume, peer comparison, industry performance, volatility, and understanding of market trends. If the collection of the 30 or 50 best companies shows an upward or downward trend, it means that the overall trend of the stock market is very important.