--- title: "How Indian Stock Markets Work | RupeeCase Learn" description: "A plain-language guide to NSE, BSE, SEBI, T+1 settlement, demat accounts, and equity ownership. By Tanmay Kurtkoti, RupeeCase / QCAlpha." source_url: "https://www.rupeecase.com/learn/path-1/module-1-1-how-indian-stock-markets-work" --- [Path 01 1 of 5](/learn/path-1/)How Indian Stock Markets Work[Next 1.2](/learn/path-1/module-1-2-understanding-stock-data) ## Why does a stock market exist? Think about Reliance Industries. Its telecom network alone took well over ₹1.5 lakh crore of capital to build. No single bank lends that. So a company goes to millions of ordinary people and says: give us money, and in return you own a small slice of the business. That swap, money for ownership, is what a stock market is. When you buy a share of Reliance, TCS, HDFC Bank or Infosys, you are not lending them money. You become a part owner. A tiny part, but a real, legal one. That distinction matters more than most people realise, and it is the first thing I explain to anyone who asks me where to start. **₹474L Cr**market cap of all BSE listed companies, about US$5 trillion BSE, 17 Jun 2026 **13.5 Cr**unique investors (PANs) registered on NSE NSE Market Pulse, 31 Aug 2026 ## NSE and BSE, India's two main exchanges [NSE India](https://www.nseindia.com)National Stock Exchange nseindia.com · Est. 1992 * Main index[Nifty 50](/learn/glossary#nifty-50) * Cash market share, FY26About 93% * Listed entities, 30 Jun 2026About 3,000 * Equity futures share, FY26Almost all [BSE India](https://www.bseindia.com)Bombay Stock Exchange bseindia.com · Est. 1875 * Main indexSensex 30 * Asia's oldest151 years * Companies listed5,000+ * LocationDalal St, Mumbai Sources: NSE corporate presentation, May 2026 (FY26 market shares); NSE offer document, September 2026 (listed entities); BSE listing data, June 2026. Most large companies, [RILReliance](https://www.nseindia.com/get-quotes/equity?symbol=RELIANCE) [TCSTCS](https://www.nseindia.com/get-quotes/equity?symbol=TCS) [HDFCBKHDFC Bank](https://www.nseindia.com/get-quotes/equity?symbol=HDFCBANK) [INFYInfosys](https://www.nseindia.com/get-quotes/equity?symbol=INFY), are listed on both. As a retail investor it barely matters which exchange you use; your broker routes the order. What matters is the benchmark. For [systematic investing](/learn/glossary#systematic-investing) that is the Nifty 50 or the [Nifty 500](/learn/glossary#nifty-500). The split between the two is not even. NSE did about 93% of cash market turnover in FY26 and nearly all equity futures. BSE has far more listed companies, many of them small, and it won back a real slice of index options after 2023. Two exchanges competing is good for you. It keeps fees honest and gives the system a backup. When people say "the market is up 1.2% today" they mean the Nifty 50. On 9 October 2026 it closed at 22,520 on a P/E of 19.3, as published by [NSENSE India](https://www.nseindia.com). RupeeCase builds every strategy on NSE end of day data, and each one names its own universe, from the Nifty 50 up to the Nifty Total Market of about 750 stocks. ## SEBI, the referee [SEBISEBI](https://www.sebi.gov.in), the Securities and Exchange Board of India, is the regulator that oversees everything. [SEBI](/learn/glossary#sebi) got statutory powers in 1992, partly in response to the Harshad Mehta scam, which showed how badly an unregulated market could be manipulated. 1. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. 2. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. 3. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. 4. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. 5. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. 6. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. 7. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. 8. 3 Aug 2026**Closing auction session**Stocks with F&O contracts get their close from an auction, not an average. * Sets the rules for quarterly results and disclosures, so there are fewer surprises * Regulates brokers and requires client money and securities to stay segregated, so your money stays yours * Keeps your holdings with an independent depository, so they survive a broker shutting down * Runs circuit breakers: market wide halts at 10%, 15% and 20% index moves, plus daily price bands on single stocks [SEBI, Securities and Exchange Board of India](https://www.sebi.gov.in) [NSE India](https://www.nseindia.com) [BSE India](https://www.bseindia.com) ## How a trade settles, T+1 1 You place the order Your broker app checks your available cash in milliseconds and accepts the instruction. 2 Order routes to the exchange The broker sends it to the exchange's matching engine, usually in well under a second. 3 Match found, trade confirmed The engine pairs your buy with a sell at the best price. The trade shows up in your app straight away. 4 Clearing happens The clearing corporation nets all of the day's trades and works out what each broker owes or is owed. It also guarantees the trade if one side fails. 5 Settlement on T+1 The next trading day, shares arrive in your demat ([NSDLNSDL](https://nsdl.co.in) / [CDSLCDSL](https://www.cdslindia.com)) and the money leaves your account. India finished the move from T+2 to T+1 on 27 January 2023. 1. **Your demat**Shares arrive through NSDL or CDSL on T+1. 2. **Your demat**Shares arrive through NSDL or CDSL on T+1. 3. **Your demat**Shares arrive through NSDL or CDSL on T+1. 4. **Your demat**Shares arrive through NSDL or CDSL on T+1. 5. **Your demat**Shares arrive through NSDL or CDSL on T+1. Your shares cannot simply disappear. The whole chain is electronic and regulated. The ownership record sits with NSDL or CDSL, not with your broker. Your broker is just a gateway. ## Why T+1 is a big deal for retail For years most of the world settled equity at T+2. The US moved to T+1 only in May 2024. India got there first among large markets, completing the shift on 27 January 2023 after a phased move that started with the smallest stocks in February 2022. It looks like a small operational change. The investor consequence is large. Capital comes back a day earlier. That sounds trivial until you scale it. Sell on Monday and the money is usable on Tuesday, not Wednesday. A [SIP](/learn/glossary#sip) investor barely notices. An active trader, or a fund manager rotating a book every two weeks, notices a lot, because every rupee works more days in the year. Counterparty risk also drops. Every extra day between trade and settlement is a day when something can go wrong with a broker or a clearing member. Halve the window and you halve that exposure. SEBI then went further with an optional same day settlement, T+0, which started as a beta on 28 March 2024 and was later widened to up to 500 eligible stocks. It runs alongside T+1, it needs funds and shares in place before you trade, and so far uptake is small. Treat T+1 as the system you live in. ## Demat versus broker, the difference that matters Beginners often mix up the two. A broker gives you the gateway to place orders. The demat account is the electronic record of what you own, kept by a depository participant that connects to NSDL or CDSL. They are separate things, and the legal weight sits with the depository, not the broker. The day a broker fails, the order gateway stops. The shares in your demat are still legally yours. SEBI built the system around this separation. The Karvy case, which came to light in November 2019, is the textbook example: a broker had pledged client shares without consent to raise money for itself. SEBI froze it, the exchanges and depositories stepped in, and client holdings were moved back to their owners. The cleanup was painful, and it led to tighter pledge rules in 2020. Check your Consolidated Account Statement (CAS) from NSDL or CDSL every month. It is the source of truth, not your broker app. ## Your demat account ▼ Who actually holds your shares SEBI · NSDL · CDSL framework SEBI, Regulator NSDL National Securities Depository CDSL Central Depository Services Your Demat Account This belongs to YOU, not your broker Your Broker (access gateway only) Can be changed anytime, your shares stay put Before 1996, shares were paper certificates. Lose them and you had a long, ugly fight to prove ownership. SEBI pushed dematerialisation, and today almost every listed share exists only in digital form. Your **demat account** is held with either [NSDLNSDL](https://nsdl.co.in) or [CDSLCDSL](https://www.cdslindia.com). Your broker gives you access to it, but the account belongs to you. If your broker shuts down tomorrow, you move the account to another one and carry on. The numbers tell you how fast this has grown. CDSL alone reported 19.34 crore beneficiary accounts at the end of September 2026, and NSDL serviced about 4.5 crore in May 2026. That is well over 23 crore demat accounts, against roughly 4 crore in March 2020. Many people hold more than one, which is why NSE counts unique investors by PAN instead: 13.5 crore at the end of August 2026. Demat accounts grew almost six times in six years Demat accounts at NSDL and CDSL combined, crore 1. 2026, latest**23.85** 2. 2026, latest**23.85** 3. 2026, latest**23.85** 4. 2026, latest**23.85** 5. 2026, latest**23.85** 6. 2026, latest**23.85** 7. 2026, latest**23.85** Sources: NSDL and CDSL year end statistics; latest is CDSL 19.34 crore (30 Sep 2026) plus NSDL 4.51 crore (May 2026). ## Who participates? Promoters own half of India Inc; you own 9.5% directly * Promoters**50.2%** * DIIs, incl. mutual funds**19.5%** * Foreign portfolio (FPI)**15.1%** * Individuals, direct**9.5%** * Others**5.7%** Source: NSE India Ownership Tracker, June 2026 quarter, NSE listed companies by value. Others is the remainder. Read that chart twice. For decades foreign portfolio investors were the marginal buyer of Indian stocks. In the June 2026 quarter they owned 15.1% of NSE listed companies, the lowest in more than 17 years, after record outflows. Domestic institutions owned 19.5% and have stayed ahead of foreign money for seven quarters in a row. Add the shares individuals hold through mutual funds to the 9.5% they hold directly, and Indian households own a record 19.3%. FIIs and DIIs tend to move against each other. When FIIs sell in a global risk off, DIIs, fed by monthly SIP money, usually buy. I have watched this dynamic cushion several sharp corrections in Indian markets over the last decade. It does not stop a fall. It changes how deep and how long it runs. ## Market hours | Session | Time (IST) | What happens | | --- | --- | --- | | Pre-open | 9:00 to 9:15 AM | Orders collected for about eight minutes, then a call auction sets the opening price | | Normal trading | 9:15 AM to 3:30 PM | Continuous two sided trading. Stocks with F&O contracts stop at 3:15 PM and move into the closing auction. | | Closing auction | 3:15 to about 3:30 PM | Since 3 Aug 2026, for stocks with F&O contracts: orders are pooled and one auction price becomes the close | | Post-close | 3:40 to 4:00 PM | Trading at the closing price only. Other stocks still close on the volume weighted price of trades from 3:00 PM | | After-hours data | Evening | End of day files are published. Systematic signals, including RupeeCase rebalance lists, are computed from them. | Source: NSE circulars on the closing auction session, NSE/CMTR/73362 (18 Mar 2026) and NSE/CMTR/75479 (30 Jul 2026), following SEBI's circular of 16 Jan 2026. As a systematic investor you do not need to watch the market during trading hours. Signals run on end of day data. [Rebalancing](/learn/glossary#rebalancing) happens on a schedule, not on intraday reactions. The closing price is the one number every index, every fund NAV and every back test uses, which is why SEBI moved to an auction for it: one price set by the whole order book is harder to push around in the last few minutes. ## What equity ownership actually means Owning equity means you share in profits you did not have to earn yourself. Companies like [RILReliance](https://www.nseindia.com/get-quotes/equity?symbol=RELIANCE) and [TCSTCS](https://www.nseindia.com/get-quotes/equity?symbol=TCS) grew their profits for decades, and patient owners collected that growth through price and dividends. Lenders got their interest and nothing more. Ownership also means you take the bad years. On 9 October 2026 the Nifty 50 was 9.9% below where it stood two years earlier, and quality and momentum style indices were down more. Equity pays you for sitting through stretches like that. It does not pay you for avoiding them. ₹1 lakh for 20 years: the rate matters more than you think ₹1,00,000 at 7% a year for 20 years grows to about ₹3.9 lakh; at 12% to about ₹9.6 lakh. Before tax and inflation. Illustration with a fixed yearly rate, not a forecast. For scale: the Nifty 50 total return index compounded at 12.12% a year from November 1995 to 30 Sep 2026, and 6.38% a year over the last five of those years (NSE Indices factsheet). ## A worked example: your first trade, start to finish Say you buy 10 shares of a Nifty 50 stock at ₹1,500 on a Monday. Here is what actually happens to your ₹15,000. * **Monday, 10:05 AM.** You place a limit order at ₹1,500. Your broker blocks ₹15,000 plus charges. The exchange matches it within a second. The contract note arrives by evening. * **Monday evening.** The clearing corporation nets every trade of the day. Your broker pays in on your behalf. * **Tuesday.** Settlement day. The 10 shares are credited to your demat and the depository sends you a message. They are now yours, in your name, independent of the broker. * **Charges.** On a ₹15,000 delivery buy you pay securities transaction tax of 0.1% (₹15), stamp duty of 0.015% (₹2.25), small exchange and SEBI fees, GST on fees, and whatever brokerage your broker charges. A depository charge applies when you sell. Module 1.5 breaks every line down. * **Month end.** Your CAS lists the 10 shares. If the app and the CAS ever disagree, the CAS wins. ## Common mistakes beginners make here **Thinking the broker holds your shares.** It holds your login. NSDL or CDSL holds your shares. Read your CAS, not just the app. **Giving a broker blanket power of attorney.** SEBI replaced the old open ended POA with a limited purpose version and the demat debit and pledge instruction. Grant only what a trade needs. **Treating the Nifty 50 as "the market".** It is 50 large companies. The Nifty 500 covers roughly nine tenths of the [free float](/learn/glossary#free-float) market value of NSE listed stocks, and the Nifty Total Market about 750 stocks. Know which one a number refers to. **Watching the screen all day.** For a long term investor, the closing price is what counts. Intraday moves are mostly noise. **Myth**If my broker goes bust, my shares go with it. **Fact**Your shares sit in your demat with NSDL or CDSL, in your name. A failed broker stops the order gateway; you move the demat to another broker. Check your monthly CAS. ## How this shows up in RupeeCase All of this is the ground RupeeCase stands on. Your stocks sit in your own demat, with your own broker. RupeeCase never holds your money or your shares. Each strategy is a rules based index, run on NSE end of day data, and a rebalance is just a list of buy and sell orders placed through your broker, settling T+1 like any other trade. The simplest example is the [Nifty 50 Equal Weight](/strategies/nifty-50-equal-weight) strategy: all 50 Nifty names at about 2% each. If you want to see how an account connects, [Getting started](/getting-started) walks through it. Is my money safe if my broker shuts down?Your shares are, because they sit with NSDL or CDSL in your name. Cash lying with the broker is a different matter: SEBI requires it to be segregated and settled back to you regularly, and exchange investor protection funds exist for defaults, but the cleanest protection is not to leave large idle balances with any broker. Do I need accounts on both NSE and BSE?No. One broker gives you access to both exchanges through one trading account and one demat account. For most stocks the price on the two exchanges is within a few paise. What changed with the closing auction in August 2026?For stocks that have F&O contracts, normal trading now stops at 3:15 PM and a short auction sets the closing price. Before that, the close was the volume weighted average of the last 30 minutes. If you place orders near the close, check which session your stock is in. What does How Indian Stock Markets Work cover?Before you invest a single rupee, you need to understand the plumbing. NSE, BSE, SEBI, settlement, demat accounts, all of it, in plain language, with no shortcuts. It works through Why does a stock market exist?, NSE and BSE, India's two main exchanges, SEBI, the referee, How a trade settles, T+1 and more. It is module 1.1 of Path 1, Market Foundations, about 12 minutes of reading, free. TTry it ## How Indian Stock Markets Work, in numbers. Pre-open, regular and post-close session windows in IST Your numbers, the module's formula, nothing stored. Calculator ### NSE / BSE Market Hours Tracker Indian equity has three distinct windows on a trading day. Each behaves differently for retail orders. Current time (IST 24-hour, hh:mm) [Full calculator: Rule of 72](/learn/tools/rule-of-72) AApply it on RupeeCase ## Nifty 50 Equal Weight All 50 Nifty names, equal weight. The simplest card on the lineup. An index built on the rules this path teaches, entry level, lowest risk band on the lineup (resolved by the patcher at build time), held stock by stock in your own demat. Risk band: Moderate. [See the strategy](/strategies/nifty-50-equal-weight)[Sign up for RupeeCase](https://invest.rupeecase.com/signup?strategy=nifty-50-equal-weight) [CAGR16.4%Sharpe1.13Max DD−15.7%Minimum249000Model, back tested, as of 27 Apr 2026. Not client returns, not a promise.](/strategies/nifty-50-equal-weight) QQuick check ## 10 questions, 7 to pass. Pick an answer and the explanation appears. Your result stays on this device and counts towards the Path 01 certificate. CCheck yourself ## Path 01 so far. Your quick check results on this device, stop by stop. 1. [TPath test, 30 questionsNot yet](/learn/path-1/module-1-5-orders-costs-taxation#pathTestSection) 2. [TPath test, 30 questionsNot yet](/learn/path-1/module-1-5-orders-costs-taxation#pathTestSection) 3. [TPath test, 30 questionsNot yet](/learn/path-1/module-1-5-orders-costs-taxation#pathTestSection) 4. [TPath test, 30 questionsNot yet](/learn/path-1/module-1-5-orders-costs-taxation#pathTestSection) 5. [TPath test, 30 questionsNot yet](/learn/path-1/module-1-5-orders-costs-taxation#pathTestSection) 6. [TPath test, 30 questionsNot yet](/learn/path-1/module-1-5-orders-costs-taxation#pathTestSection) Explore next ## Put the module to work. * [GuideHow much money do you need to start investing in stocks in India?One share, a diversified basket or an index fund: what each one really needs.](/guides/how-much-money-to-start-investing) * [GuideNifty 50 vs Sensex: what an index is, and how NSE and BSE build theirsHow NSE and BSE build their indices, why they move together, and where they differ.](/guides/nifty-50-vs-sensex) * [Blog noteWhy your sell is not cash yetBehaviour, a short note](/blog/2026-06-08-morning-t1-settlement/) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. Slides, sources, factsheets and the rebalance logs live there, and members join a daily Google Meet with me. [Sign up for RupeeCase](https://invest.rupeecase.com/signup) [Join the WhatsApp group](https://forms.gle/C6HMtM1Z2GfeocQV7) [One form, one group](https://forms.gle/C6HMtM1Z2GfeocQV7)Scan with your phone camera SSources ## Where the figures come from. 1. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 2. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 3. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 4. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 5. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 6. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 7. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 8. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) 9. [NSE index data: Nifty 50 close 22,520.45 and P/E 19.27 on 9 Oct 2026](https://www.nseindia.com/market-data/live-market-indices) GTerms ## 7 terms from this module. Market capShare price × shares outstanding. A company with 500 crore shares at ₹2,000 is worth ₹10 lakh crore. [Large cap](/learn/glossary#large-cap)The 100 largest listed companies by average full market cap, per SEBI's 2017 categorisation and the half yearly AMFI list. The cut off moves with the market. [Free float](/learn/glossary#free-float)Shares actually available for trading, excluding promoter and locked in holdings. Index weights use free float market cap. T+1 settlementShares and cash change hands one trading day after the trade. India completed the move from T+2 on 27 January 2023. Circuit breakerA market wide trading halt when the Nifty 50 or Sensex moves 10%, 15% or 20% in a day; single stocks also carry daily price bands of 2%, 5%, 10% or 20%. Demat accountDigital locker for your shares, maintained through NSDL or CDSL. Belongs to you, not your broker. Closing auction sessionSince 3 August 2026, the short auction after 3:15 PM that sets the closing price of stocks with F&O contracts. [All 91 terms in the glossary](/learn/glossary) [From the podcast archiveEP113: One Stock, Two Exchanges, Two Prices, IndusInd Closes 1002.90 And 970 On The Same Day, BANKEX -1,094 Points vs Nifty Bank -0.47%, Nine Of Ten Worst Dislocations Are Banks, Sensex Indicative Flashes 75,098, Monthly Settles 667 Points BelowThe Tanmay Edge, 28 Aug 2026, graded 4/5](/podcast/episodes/2026-08-28)[Pillar guideIndian Markets14 modules across paths 1, 6](/learn/indian-markets) Education only, not investment advice. RupeeCase is a technology platform operated by QC Alpha Technologies Pvt Ltd; it is not a fund, a PMS or a SEBI registered investment adviser. Model returns are back tested and not a promise of future returns. Figures carry the date they were checked.