To buy stocks in India, one needs to use the vital platform – the stock exchange. And NSE and BSE serve as primary stock exchanges where stocks and financial assets are being traded.
NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are the platforms where the companies raise capital from the public and investors buy and sell securities to generate good returns. Being the primary stock exchange of India, NSE, and BSE do have similar working goals, but with certain differences.
In this blog we will cover What is NSE and BSE in detail, along with their introduction, working, and differences.
NSE – National Stock Exchange
NSE was formed in 1992 with the goal of ending the monopoly enjoyed by BSE or the Bombay Stock Exchange. NSE got its recognition as a stock exchange in April 1993 by the Securities Exchange Board of India (SEBI) and commenced its operations in 1994 by launching the wholesale debt market and the cash market segment.
Furthermore, the Nifty 50 was introduced in 1996, making NSE the biggest stock exchange in India. Nifty lists out the top 50 companies that are actively traded stocks in the market. The other key indices of NSE are Nifty next50, Nifty500, Nifty Midcap150, Nifty Midsmallcap400, & Nifty Smallcap250.
As of December 2023, NSE is India’s largest and the world’s 7th largest Stock Exchange with a market capitalisation of about INR 334.7 trillion with around 2266 listed companies. Nifty was launched with a base value of 1000 on 22 April 1996. Being a pivotal part of the Indian Economy, NSE plays a prominent role in its growth and development.
BSE – Bombay Stock Exchange
Founded in July 1875, by Premchand Roychand Bombay Stock Exchange (BSE) is Asia’s oldest stock exchange. It was earlier known as “The Native Share & Stock Brokers Association” when it began its operations on 9th July 1875.
Besides being the oldest stock exchange, BSE is also the fastest globally, with a trading speed of 6 microseconds. BSE introduced Sensex in 1986 as its equity index and primary indices. Sensex lists out 30 most actively traded stocks of the Indian stock market working in more than ten sectors.
Based in Dalal Street, Mumbai the association is now managed by Sethuratnam Ravi. With over 6000 listed companies, BSE has a market capitalization of around INR 366 trillion and is world’s 8th largest stock exchange.
Other key indices of BSE include BSE 100, BSE 200, BSE 500, BSE Smallcap, BSE Midcap, BSE Auto, BSE PSU, BSE Metal, BSE Pharma, & BSE FMCG.
How does NSE and BSE work?
NSE and BSE are the leading stock exchanges in India. Even though BSE is older, NSE is larger in terms of trades and turnover. The trading mechanism works similarly for both the exchanges.
Investors decide their trading strategy and buy and sell shares and securities in these exchanges. Nifty and Sensex, the primary indices of these associations help the investors in deciding the investment plans to trade.
BSE worked on an open floor system until 1995 and shifted to an electronic trading system after gaining its global recognition. BSE also gained popularity worldwide used by the New York Stock Exchange and NASDAQ.
How to trade on NSE and BSE?
A company that is willing to raise capital from the public registers itself with these exchanges and sets up an IPO. The company offers shares and sell them at a predetermined price and the investors become the shareholders of the company.
Now the first step for investors is to open their Demat accounts with any of the numerous platforms available in the market and begin their trading journey with NSE and BSE. Once the Demat account of the investor and trader opens, the investors take the help of the indices to understand the stock market.
These investors gain profit in the form of dividends & bonuses from such shares in their holding and grow their portfolio. Investors can buy or sell the stocks in BSE or NSE and sell on any of the platforms. It is possible to buy on NSE and sell on BSE through your Demat account and vice-versa. However, this option is available for investors and not for Intraday traders.
Difference between NSE and BSE
| Basis | NSE | BSE |
| Full form | National Stock Exchange | Bombay Stock Exchange |
| Incorporated in | 1992 | 1875 |
| Location | Exchange Plaza, Bandra Kurla Complex, Mumbai | Dalal Street, Mumbai |
| Stock Index | Nifty | Sensex |
| Listed companies | Above 1600 | Above 6000 |
| Global stock exchange ranking | 11th | 10th |
| Market Capitalization | INR 199 trillion | INR 266 trillion |
| Trading volume | Higher | Comparitively lower |
| Electronic trading | NSE has been a fully eletronic stock exchange since its incorporation | In 1995 BSE switched to electronic trading |
| CEO | Mr. Vikram Kimaye | Mr. Ashish Kumar Chauhan |
To wrap up
BSE and NSE have made the investment journey easy and visionary. These exchanges not only help the growth of the country economically but also help the company and investors. These are efficient platforms for investors to trade in securities and to indicate the economic health of India.
FAQs
1. What are the stock indices of NSE and BSE?
– Nifty is the stock indices for NSE with the top 59 large-cap companies of the Indian stock market. Sensex is the stock indices for BSE with the top 30 most actively traded stocks.
2. What is SEBI’s role in NSE and BSE?
– SEBI lays down the rules and regulations which are required to be followed by the exchanges. These exchanges are listed under SEBI and SEBI regulates both NSE and BSE.
3. As an investor, how to choose between NSE and BSE?
– Investors can choose between NSE and BSE, keeping the following factors in mind,
• Investment goal
• Market research including past performance, trading volume, and market trends
• The platform which is easily accessible
• Diversifications of investment opportunities in both exchanges