October 4, 2022


Most of us know that Bombay Inventory Change (BSE) is the oldest inventory alternate in Asia which has round 5,000 firms listed on its platform for getting and promoting. BSE categorises the shares of various firms into varied teams. It’s important for traders to grasp the nuances of this classification earlier than investing.

Grouping of shares
The grouping of shares relies on what the inventory represents. Accordingly, BSE classifies the fairness shares into a number of teams corresponding to a ‘A’, ‘T’, ‘S’,‘Z’ and ‘B’. A share labeled in ‘A’ group implies that it is among the most liquid shares amongst all of the shares listed, has increased buying and selling volumes, and fulfils the compliances of the alternate. Additional, when a share is positioned this class it signifies that inventory trades are performed underneath the traditional rolling settlement course of. As on date, 387 firms are positioned on this class.

Shares labeled underneath the T group type a part of the trade-to-trade (T2T) section. Shares belonging to this class are usually not permitted to be traded on an intraday foundation. So, traders or merchants who like to purchase these shares ought to take supply by paying full quantity. Shares underneath this group are ceaselessly moved out and in of trade-to- commerce settlement to keep away from hypothesis. As of now 368 shares fall underneath this class.

Shares of small and medium firms are labeled underneath ‘S’ group. Firms underneath this group have a turnover of Rs 5 crore and tangible belongings price Rs 3 crore. Typically, these shares have low quantity and liquidity and these shares typically witness frantic worth fluctuations. As on date, 40 firms are listed underneath this group. ‘Z’ group was launched by BSE in 1999. Shares clubbed underneath this class are these which have did not adjust to sure pointers of BSE. These firms might not have fulfilled the alternate’s itemizing necessities, or did not redress investor complaints, or haven’t made prior preparations with depositories like CDSL and NSDL for dematerialisation of their shares. As on date, 433 firms are positioned underneath this group.

Group ‘B’ accommodates all of the shares that don’t fall into any of the above mentioned classes. Typically ‘B’ group shares witness regular buying and selling volumes and are available underneath the rolling settlement system. As on date, 2,216 firms are labeled underneath group ‘B’.

What’s the inference?
Typically ‘A’ group shares are good for buying and selling and investing functions. Shares underneath ‘T’ group are usually not essentially dangerous ones as intraday buying and selling shouldn’t be permitted. Typically, shares underneath this class present safety towards speculative trades and disruptive worth actions.

The danger of investing in ‘S’ group shares is that each one the businesses are small in measurement and have low liquidity. One ought to steer clear of shopping for and promoting ‘Z’ group class shares as they fail to fulfil even the itemizing norms of the BSE. Group ‘B’ shares are one notch decrease than that of Group ‘A’ shares by way of liquidity and different parameters set by BSE.

To conclude, it’s important for traders to know the totally different group of shares and their traits earlier than investing. Nevertheless, an investor ought to go for thorough due diligence earlier than investing in any firm’s shares, no matter the group to which an organization belongs.

Inventory choosing

  • BSE classifies fairness shares into a number of teams corresponding to a ‘A’, ‘T’, ‘S’,‘Z’ and ‘B’ based mostly on what these shares signify
  • ‘A’ group shares are probably the most liquid, have increased buying and selling volumes, and fulfil the compliances of the alternate
  • ‘B’ group shares witness regular buying and selling volumes and are available underneath the rolling settlement system
  • Shares of small and medium firms are labeled underneath ‘S’ group. These shares have low quantity and liquidity and infrequently witness frantic worth fluctuations

The author is a professor of finance & accounting, IIM Tiruchirappalli



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