BSE stock classification is the ongoing process through which the grouping of stocks is done with a basic level of understanding for each share. The whole categorisation is based on various sections and subcategories. Before diving into the topic, let us find out what BSE stock means. Stock classifications are mostly done to handle the shares, which are sub-categorised and based on their trading .
Introduction To BSE
The BSE or Bombay Stock Exchange is a robust exchange system drafted by the native stockbrokers and Associations. Listing for over 6000 companies in the world, BSE is a widely noticed stock exchange. It was established roughly two decades after the first freedom fight of India erupted against the East India Company. Since there are so many companies listed under BSE, it makes the BSE exchange one of the most extensive operating floor mechanism for a trading platform. In the year of 1995, BSE switched the shift of its trading interests to the electronic trading platform developed by the CMC ltd.
The Grades Of Classification
The BSE stock groups are categorised into six groups. They are A, B, T, S, TS, and Z.
This categorisation is done based on the size, liquidity, and exchange compliance of the companies. There are speculative interests that are managed with them.
The Various BSE Stock Groups And Classifications
- The T Group
Some stocks fall under the trade to trade settlement. These are known as the T group categorisation. Here are some of its features:
- Each deal that takes place under this group is called an individual trade settlement.
- You cannot get out of the trades when you are rolling with the regular exchange transfer and transactions.
- The seller trading here pays for the deliverable based on the shares that they have bought and sold.
- In case there is no substantial fall in the price of the share, there is no credit given back.
- The stocks are versatile. They are moved in and out of business.
- There are speculative interests that occur in this category.
The share price is marketed on the day of the purchase of the shares. Suppose someone has purchased the shares today and sold them, then you have to pay the speculative within two days. This group is generally for the traders who always trade on basic terms.
- The S group stocks – Small and medium stocks
The stock group S falls under the BSE IndoNext segment.
- BSE IndoNext comprises of small and medium-size. These companies have a listing in the regional companies Stock of Exchange.
- The turnover of these companies is generally around five crores. The tangible assets are of rupees three crores.
- These stocks contain a low liquidity range.
- TS group stocks
The TS group of stocks, as the name suggests, is a combination of T & S groups combined.
- It consists of all the ‘BSE-IndoNext’ segments.
- As a surveillance measure, this category of stock settles on a trade to trade basis.
- Z group of stock – Caution to all the retailers
Z group of stock include companies that have a dematerialisation agreement with either CDSL or NSDL only. It is considered one of the riskiest zones to invest in. Let us have a look at some of its features:
- As mentioned earlier, this grade belongs to the stock of the companies which have a dematerialisation arrangement. It complies with only one of two categories, CDSL and NSDL.
- In the public domain, not much information is available to these companies. This makes them risky to invest.
- These companies have shallow media coverage, which is the reason why they are hidden from public scrutiny.
- The companies that have a Z group of trading also have poor scores when it comes to redressal of investor complaints.
- There are penalty scores based on this type of trading stocks.
- B group of stocks
These are the type of stocks which are left behind.
- B group of stocks does not fall under any category and listings.
- These types of stocks settled under the rolling system. The counter for the stock exchange sees an average value.
- Tradable financial instruments that are different from the stocks of the companies fall under the ‘Others’ group. Group G and F for rating also fall under ‘Others.’
- There are fixed income securities where this exchange system is permitted. These fixed-income securities are the company deposits. These are the instruments mainly categorised under the F group.
- Retail investors from all around the trade in government securities. These are the long-dated GOI bonds on the exchange instruments. These fall under the government securities which categorises under Group G.
The SLB Group
The Securities Exchange Board of India (SEBI) announced the introduction of the Securities Lending and Borrowing Scheme (SLBs) around 2007. This enables a platform for the borrowing of all securities.
These are the enabled settlement of all the securities sold short. There are around 207 companies which are currently under the list of SLB. While trading, investors can own and sell stock according to their wishes. All classes of investors are allowed a short sell. These include all parties from investors & retail to institutions.
Various Groups Based On The Capitalization Of The Market
Here is the list of groups based on market capitalisation –
- The large-cap stocks, where the capitalisation value of the market is shared by large-cap companies (more than 1000 crore rupees).
- The second group is called mid-cap stocks. It is the stock of companies with a market capitalisation between the 200 and 1000 crore rupees.
- The last group for this categorisation is called the small-cap. These are the stock of those companies whose market capitalisation lies between rupees 30 and 200 crores.
BSE Stock Categorization Helps Both Exchange And Investors
It is important to note that both the BSE and the NSE have their way of categorisation and group listed stocks. These classifications are specially made for both the exchange and the investors. They have different parameters. The NSE classification is based mainly on the volume of stocks.
The BSE Stock classification is based on the quality of the stocks & their liquidity. Grouping of shares based on a universal market capitalisation method helps investors be aware of the situation before they invest in any category.