When it comes to the equity market in India, there are two main stock exchanges that enjoy the bulk of the trading volume. One is the Bombay Stock Exchange, abbreviated as BSE, while the other is the National Stock Exchange, also known as NSE. These are two of the biggest stock exchanges in India and are among the largest in all of Asia, after Japan, China, and Hong Kong.
Whether you are an investor or a trader, it is essential to understand what these stock exchanges are and learn the key differences between BSE and NSE. In this article, we’ll discuss these two stock exchanges and better understand the difference between the NSE and BSE.
What Is NSE?
The National Stock Exchange (NSE) is a prominent stock exchange in India, situated in Mumbai. It’s the largest stock exchange in India and the second-largest globally in terms of equity share trades. NSE was founded in 1992 as the first electronic exchange without member ownership.
Leading institutions such as IDBI, IFCI, LIC and others established NSE to create a modern, fully automated, nationwide trading platform. In 1994, it commenced operations in the wholesale debt market segment. The Nifty and Bank Nifty serve as important benchmark indices for the NSE.
The NSE has several indices: Nifty, Bank Nifty, Nifty 500, Nifty Midcap150, Nifty Smallcap250 and Nifty MidSmallcap 400. The flagship index of the NSE is the NIFTY 50, which comprises 50 major stocks and is widely used by investors in India and around the world to gauge the Indian capital markets. As of August 2023, NSE boasts a total market capitalisation of over $3.5T trillion, ranking it as the 8th largest stock exchange globally.
The NIFTY 50 index is widely used by investors worldwide to understand the dynamics of the Indian stock markets. In 2019, 2020, and 2021, the NSE was the world’s largest derivatives exchange. As of September 2023, NSE had 33.3 million active investors.
What Is BSE?
The Bombay Stock Exchange (BSE) is another prominent stock exchange in India, located in Mumbai. It’s one of the oldest stock exchanges in the country and plays a significant role in India’s financial markets. BSE was established in 1875 and has a rich history of trading.
BSE was originally an open-outcry system, but it has evolved over the years to incorporate electronic trading. It’s known for its iconic Phiroze Jeejeebhoy Towers, which are a symbol of India’s financial markets.
Over the years, BSE has diversified its range of financial products and services to encompass a wide array of financial instruments. This expansion has included the introduction of bonds, derivatives, mutual funds, and exchange-traded funds (ETFs) among its offerings.
BSE’s benchmark index is the SENSEX, which includes 30 of the largest and most actively traded stocks on the exchange. The SENSEX is a key indicator of the performance of Indian stocks and is closely followed by investors in India and globally. Other indices of BSE include S&P BSE Auto, S&P BSE Bankex, S&P BSE 500, etc.
As of November 9, 2023, the Bombay Stock Exchange had a total market capitalisation of ₹3,20,76,062 crore with 4,812 companies, cementing its position as one of the most prominent stock exchanges in India and around the world.
Difference between NSE and BSE
Now that you know more about these two stock exchanges, here’s some more information that clearly highlights the difference between BSE and NSE.
|Comparison Aspect||Bombay Stock Exchange (BSE)||National Stock Exchange (NSE)|
|Introduction||Being the oldest stock exchange, BSE boasts a rich history.||NSE, a relatively younger stock exchange, is a pioneer in introducing a fully automated electronic trading system.|
|Year of Establishment||BSE was founded in 1875.||NSE was established in 1992.|
|Management||Mr Ashishkumar Chauhan, Managing Director and CEO.||Mr Vikram Limaye, Managing Director and CEO|
|Key Index||BSE’s benchmark index is known as Sensex 30.||NSE’s benchmark index is the Nifty 50.|
|Listed Companies||BSE has more than 4,000 listed companies.||NSE has more than 1,600 listed companies.|
|Global Ranking (2023)||BSE is ranked 9th globally.||NSE holds the 8th position in the global ranking.|
|Electronic Trading Platform||BOLT (BSE Online Trading) was incorporated in 1995.||NSE started the electronic trading platform in 1992.|
|Trading Network Coverage||BSE facilitates trading across 419 cities.||NSE’s network extends to over 1500 cities.|
|Liquidity Comparison||BSE generally exhibits lower liquidity compared to NSE.||NSE enjoys higher liquidity due to significantly higher trading volumes.|
NSE and BSE: Similarities
When examining the commonalities between NSE and BSE, there are several key points of similarities:
- Listing and Trading: Both NSE and BSE provide a platform for companies to list their shares and engage in trading activities. Listed companies on both exchanges must adhere to regulatory requirements and transparency standards stipulated by their respective governing bodies.
- Regulatory Oversight: The Securities and Exchange Board of India (SEBI), the regulatory authority overseeing the Indian securities market, exercises regulatory control over both BSE and NSE. SEBI plays a crucial role in ensuring fair trading practices, safeguarding investor interests, and upholding market integrity on both exchanges.
- Financial Instruments: Both NSE and BSE offer a diverse range of financial instruments beyond equities. These instruments encompass bonds, derivatives, exchange-traded funds (ETFs), and mutual funds. This diversity enables investors to pursue various investment strategies and explore a wide array of asset classes on both exchanges.
- Electronic Trading: Both exchanges have embraced electronic trading systems to facilitate efficient and transparent trading processes. This transition to electronic trading has improved accessibility and transparency for market participants.
- Popularity: NSE and BSE enjoy significant popularity in the Indian financial landscape, with a substantial number of investors and traders engaging with both exchanges.
- Trading Hours: NSE and BSE operate during similar trading hours. Trading typically commences at approximately 9:15 AM and concludes at 3:30 PM, from Monday to Friday, excluding market holidays. These synchronised trading hours provide consistency for market participants.
The BSE and the NSE are among the most successful stock exchanges in the world. The Bombay Stock Exchange, with its 5000+ portfolio of listed companies, is the ideal platform for beginners. Alternatively, the National Stock Exchange, with its excellent repertoire of derivative contracts, is the perfect platform for seasoned investors and traders. Now that you know the main difference between the NSE and BSE, you could go right ahead and start investing in the stock exchange of your choice. Open your Demat account today to start investing.
Which exchange is suitable for beginners, NSE or BSE?
NSE’s technologically advanced platform is a good choice for newcomers looking for an easy-to-use trading platform.
What sets NSE and BSE apart?
NSE emphasises modern technology and strict listing criteria, appealing to specific investors, while BSE’s historical significance and diverse listings attract a different audience.
Can I purchase stocks on BSE and sell them on NSE, or vice versa?
Yes, you can buy stocks on one exchange and sell them on another after they’re in your Demat account.
What are the primary stock indices for BSE and NSE?
BSE features the BSE Sensex 30, and NSE showcases Nifty 50.
When are the trading hours for NSE and BSE?
Both exchanges operate from 9:00 AM to 3:30 PM, Monday to Friday, with a Pre-Open session from 9:00 AM to 9:15 AM.
Why do stock prices differ between BSE and NSE?
The variance in stock prices between NSE and BSE is due to NSE having higher trading volume, resulting in smaller price differences due to more buyers and sellers.
How do I decide between NSE and BSE for investing?
The choice between NSE and BSE depends on your experience and preferences. Beginners may prefer BSE, while more seasoned investors might opt for NSE.