A capital market is a place where we come across various types of assets and financial securities which include bonds, derivatives, and commodities in addition to stocks. While coming across these financial instruments you might notice the symbols EQ, BE, BL, BT, GC, IL, and IQ. These symbols are referred to as the NSE stock series.
In this article, we will discuss the NSE stock series- what they mean and which category is for you to invest and trade with.
What Is NSE Stock Series?
The National Stock Exchange (NSE) is well-known for having the highest traded volume of any other exchange in India.
The stock exchange not only allows an individual to trade in equities but provides trading in other capital market instruments such as debentures, preference shares, government securities, close-ended mutual funds, ETFs, and Indian Depository Receipts (IDR).
As these investments involve high volumes of transactions on NSE. The exchange has established different series of stocks that can be traded.
Similarly, the NSE has categorized stock series in EQ, BE, BL, GC, IL, and IQ which helps you identify the category the financial asset belongs to and also helps you know who can invest in those securities.
Thus it would help the individuals get a better understanding of stock trading by familiarizing themselves with the terminologies used on NSE.
How many series of NSE are there in the Market?
There are a total of 6 series in the market. Let us understand the meaning of each series which the National Stock Exchange has categorized its scrips into:
1. NSE Series: EQ
The EQ series stands for equity and this series only allows intraday transactions and equity deliveries. This series is only meant for intra-day traders and retail equity investors.
Intraday trading refers to buying and selling shares on the same day with an intention of earning profits from the fluctuation of stock prices.
On the other hand, Equity delivery refers to buying the stock for the purpose of investment. Here, the shares will get credited to your Demat account and you can hold them for long as you like.
2. NSE Series: BE
The BE series stands for Book Entry and this series facilitates equity delivery, Trade to Trade, or T-segment trading.
Trade to trade or T2T settlement means that the securities must be delivered before being exchanged (T+2 settlement). This suggests that these stocks cannot be traded intraday or, in the case of Buy Today Sell Tomorrow, daily.
To put it another way, if you buy Trade 2 Trade equities today, you won’t be able to sell them until the T+2 settlement occurs. If you attempt to sell these shares before they have arrived in the Demat account or on the same day, your order will be rejected.
3. NSE Series: BL
The BE series stands for Block Deals. As suggested by its name, it is solely meant for trading stocks in block deals or placing large orders for shares.
These are huge deals that are required to have at least 5,00,000 shares in one lot or the value of the order has to be Rs 5 crores. Transactions in this series occur on a ‘Block Deal window’ and are executed in a single instance.
It is only possible to trade in the BL stock series from 9:15 to 9:50 am, the block window closes after this time.
4. NSE Series: GC
This series is created specifically for the purpose of trading in Government Securities (G-Sec) and Treasury Bills.
Government securities are debt instruments issued by the central and state government in the form of treasury bills, or notes in order to raise capital from the general public
Investors can invest their money, known as the principal amount, in government bonds and receive regular interest payments. Furthermore, government bonds also include the promise to legally refund the principal amount to the bondholder at the end of the maturity period.
5. NSE Series: IL
This series is exclusively intended for Foreign Institutional Investors (FII). Additionally, these investors are only permitted to trade in the securities of companies whose maximum limit for investment by FII is not reached.
Foreign institutional investors are investors in the financial market outside their official home country. These investors can include investment banks, pension funds, hedge funds, and mutual funds.
6. NSE Series: IQ
This stock series is only permitted for Qualified Foreign Investors (QFI) to trade in stocks without needing the approval of the depositories.
Earlier, only foreign institutional investors were allowed to invest in domestic enterprises under FII regulations. Foreign individuals weren’t able to invest in India without having a sub-account with an FII which limited the scope of foreign investment in the country. Thus, in 2002, the concept of QFI was introduced.
QFIs do not require to have a sub-account with the FII in order to invest in India. However, they are required to have a Demat account and a trade account with a depositor.
If an investment exceeded 8% of the company’s equity paid-up capital, prior approval must be taken by a QFI from the depository.
The Transition From QFI To FPI
To simplify the process of investment and attract more foreign portfolio investments in India, QFIs were merged with Foreign Portfolio Investors (FPI) in 2014. The FII, sub-accounts, and QFIs have now been merged with Foreign Portfolio Investors (FPI) according to the FPI Regulations of 2014.
Depending on the investor’s risk profile, the FPIs were divided into 3 categories:
Category I: government and related foreign investors
Category II: regulated broad-based funds (BBF), university funds, persons, pension funds, and unregulated BBFs with regulated investment managers registered as an FPI
Category III: those who don’t categorize under the above
The current QFIs are automatically classified as FPIs in Category III. However, if they are qualified, they may also be categorized as Category I or Category II.
In this article, we discussed the NSE stock series- what do they mean, and which category is for you to invest in?
After reading this article, hope you are in a better position to decide whether or not to invest in a specific stock listed on the market now that the NSE equity series has been decrypted.
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