You may have heard or read about these two words – NSE and BSE, many times on the television or the newspaper. But have you ever wondered what they are and what is the difference between them? Today, in this article we are going to see how these two are related and differ from each other.
Both NSE and BSE are stock exchange markets of India. A stock exchange is a place where buying and selling of stocks of various companies take place. Anyone, be it an investor or a trader can buy or sell stocks with the help of brokers. NSE and BSE are the two leading stock exchange markets of India.
What is NSE?
NSE stands for National Stock Exchange of India. It is the leading stock exchange in India and is situated in Mumbai, Maharashtra. The NSE is operated by the ownership of leading financial institutions, insurance companies, and Banks. NSE is the world’s 10th largest stock exchange in terms of market capitalization.
The NSE was started in the year 1992 and was the first dematerialized electronic exchange of India. It was modern and had a fully automated trading system. This allowed investors and traders easy access to share prices resulting in easier buying and selling of shares for all.
The NSE’s flagship index is the Nifty 50 stock index. This index comprises the top 50 companies of India. This index is widely used by traders and investors across the country as a benchmark of the Indian stock market. The Nifty 50 index was started in 1996 and currently there are close to 2002 companies listed on the NSE.
What is BSE?
BSE stands for Bombay Stock Exchange. This is India’s oldest stock exchange which started in the year 1875. It is Asia’s oldest and the world’s 10th oldest stock exchange. This stock exchange is also located in Mumbai on the famous Dalal Street. In terms of market capitalization, the BSE is the world’s 9th largest stock exchange. In 1957, BSE became the first exchange to be recognized by the Indian government.
The benchmark index of the BSE is the BSE SENSEX index. It tracks the largest 30 companies of India in terms of how big they are and financially sound. The stocks of these 30 companies are one of the most traded stocks on the exchanges all over India. This index was started on 1st January 1986. It is regarded as the pulse of the stock market of India. Today, there are close to 7400 companies listed on the Bombay Stock Exchange.
Just like NSE, BSE also offers all the latest technologies for traders and investors to buy and sell stocks. It is the fastest stock exchange in the world with a speed of 6 microseconds. BSE in 2013, upgraded to the Bolt plus technology based on the business architecture of Deutsche Borse.
Difference between NSE and BSE
| Basis of Comparison | NSE | BSE |
| Incorporation | 1992 | 1875 |
| Benchmark Index | Nifty 50 | Sensex 30 |
| Listed Companies | Around 2002 | Around 7400 |
| Global Rank | 10th | 9th |
| Liquidity | High Liquidity | Low Liquidity |
| Website | www.nseindia.com | www.bseindia.com |
| Headquarters | Mumbai | Mumbai |
| Network (Trading Terminals) | More than 1500 cities | 419 cities |
Role of BSE and NSE
When you talk about the stock market in India, the 1st two names that appear in your head are BSE and NSE. Here’s their significance in the country’s financial market:
1. Provide a Marketplace
Both BSE and NSE provide investors and traders a secondary marketplace where they can trade in securities. It provides higher liquidity when compared to other assets like land and gold.
2. Safeguard Investors
The companies that are listed on the exchanges have to follow their rules and guidelines. This safeguards investors from fraudulent companies.
3. Broad Investment Opportunity
These exchanges provide investors an option to trade in various different financial instruments. They can invest in bonds, debentures, share mutual funds, and more based on their goal and risk appetite.
4. Stock Pricing
This can be very hard to determine. It is calculated keeping in mind the demand and supply of the stock. If a company is performing well and posts good financial results, then the demand for that company’s stock increases which increases its share price. The opposite happens if the company is not performing well.
Which Stock Exchange Should Investors Choose?
Now that you know what NSE and BSE are and what their role is, you must be wondering which exchange you should use for trading. This is not a difficult question to answer.
Your trading choice depends on the stock you want to trade. There can be some stock that is available on the NSE but not on BSE. Apart from that, most of the stocks are listed both on the BSE and the NSE. The prices of the stocks are also the same on both the exchanges making it easier for you to decide. The trading times are also the same for both the exchanges which is between 9:15 AM to 3:30 PM Monday to Friday.
So, it all comes down to you which exchange you want to trade in.
Happy and Safe Investing!