STOCK MARKET - Types of Segment in NSE

TYPES OF SEGMENT IN NSE

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This is the very very important and most interesting topic to be discussed, understand and to learn in STOCK MARKET.

"Types of Segment" means what? 

In STOCK MARKET we have several times heard about equity, cash, future, option, index future and option,  stock future and option terms. 

This are the segments in STOCK MARKET.

Primarily it is divided into two part -

1. Equity / Cash Market

2. Derivative / Future & Option Market

Equity / Cash Market - In this segment stock are sold for cash and delivered immediately. NSE's cash market segment is also known as the Capital Market Segment and public listed companies traded here in this segment on T + 2 basis.  The buyer receive stock after two working days of trade and similar way seller receive money after two working days of trade.

The can hold stock as long as they want. They can get dividend, split & bonus advantages in this segment and also the price appreciation also.

Derivative / Future & Option Market - The word Derivative is used to refer the financial instruments which derive it value from some underlying assets.

This underlying assets could be equity/ shares, debt / bonds, currencies and some indices like Nifty, Bank Nifty etc.

If underlying asset of derivative is equity then it is known as Equity derivative.

If underlying asset of derivative is currency then it is known as Currency derivative.

If underlying asset of derivative is Index then it is known as Index derivative. etc....

History of derivative is very vast and utilization of future trading is also very old and touched by every part of the world.

In India derivative concept started from 1875 with organized trading in cotton by Cotton Trading Association. 

In Derivative there happen 3 month contract between buyer and the seller. In this trading pattern only contract of 3 month happen in return of money. After 3 month this contract will expiry and buyer and seller will get their benefit and loss settled in term of money only. 

No transfer of any type of share. No benefit of dividend, splits and bonus is there with in this type of segment.

Now in next article we will going to learn about the Derivative journey in India. So keep in touch.

Disclaimer : This article is only for knowledge and information sharing and not for any type of recommendation.