• The BSE is a stock exchange located in Mumbai, Indiastocks and shares image by Andrew Brown from Fotolia.com
  
  The Bombay Stock Exchange, or BSE, located in Mumbai, India, is one of the largest stock markets in the world, with over 5,000 companies listed. Established in the 19th century during India's time as a British colony, the BSE experienced a boom beginning in the 1990s, mirroring that of India's economy as a whole. The exchange now offers a forum for investors to put money into businesses headquartered in this emerging market.
  
  

Track Other Emerging Markets

• Traditionally, the stock exchanges of various emerging markets have tracked each other closely. While each national economy has specific factors that affect the price of the shares listed on its exchange, Western investors have often viewed all emerging markets similarly, with their appetite for them waxing and waning. This has led to a close correlation in their indexes, with the markets' volume and share prices moving in tandem. Investors looking to invest in the BSE can capitalize on this trend by identifying the movements of other emerging markets and using this data to predict the trajectory of the BSE. If the correlation holds, as it historically has, investors have a powerful predictive tool at their disposal.
  
  

Diversify To Capitalize on a Bull Market

• Since the 1990s, the BSE has experienced explosive growth, both in the volume of shares traded and in the average price of listed companies. According to Yahoo! Finance, between 2002 and 2008, Sensex -- the most prominent index of BSE-listed companies, equivalent to the New York Stock Exchange's Dow Jones Industrial Average -- rose an average of almost 15% each year. While the index experienced a dip in the wake of the United States' credit crisis in 2008, it continued to rise over the next two years. To profit off this long-term trend, investors may wish to get in for the long haul, purchasing a diverse portfolio of stocks, such as a conservative Indian mutual fund, to capitalize the movements of the markets as a whole.
  
  

Take Advantage of Volatility

• The BSE is also known for its incredible volatility, both up and down, with exchange-wide plunges and spikes in prices becoming almost common in the late 2000s. Between 2008 and 2010, the Sensex fell from 20,000 points to below 9,000 points and then rose again to more than 18,000 points. Several times, trading was suspended due to intraday rises and falls in price. Investors can take advantage by studying past factors that lead to these movements and then, when one begins, getting in on the ground floor.