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What are NSE and BSE?
01:10 Mins Read
NSE and BSE – two of India’s most preferred stock exchanges. What are they? Find out more in this video.
What is NSE?
The National Stock Exchange, also known as the NSE, is a stock exchange that came into being in the year 1992. At a time when physical trading was at its peak, it was the first ever exchange in India to have introduced a fully electronic mode of trading. Currently, the NSE is the largest stock exchange in India in terms of trading volume. The National Stock Exchange is well-known for its vibrant derivatives segment, whose trading volume surpasses its equity segment. It even has its own index, the Nifty 50, which is a compilation of 50 of the top companies listed in its exchange.
What is BSE?
The Bombay Stock Exchange, also known as the BSE, is India’s oldest stock exchange, being established way back in 1875 itself. Although it was established in 1875, the exchange was formally recognized by the Indian government only in 1957. The BSE also came up with its very own electronic trading platform - BOLT in 1995. In terms of the number of companies listed, the Bombay Stock Exchange is bigger than even the National Stock Exchange. Similar to the Nifty 50, the BSE also has its own index - the SENSEX. It is a compilation of 30 of the largest companies listed in the Bombay Stock Exchange.
How Does NSE & BSE Work?
The two stock exchanges work in quite a similar manner. Firstly, a company makes an application for listing its shares on the stock exchange. This is usually done as part of the company’s Initial Public Offering (IPO) process. Once the application is approved by the exchange, the company’s shares are listed on the exchange. This means the shares can now be bought and sold freely.
Now, any investor interested in purchasing the shares of a listed company places a buy order with their stock broker, who then forwards the same to the relevant exchange. The stock exchange matches the buy order with a similar sell order placed by another investor. Once the order is matched, the transaction gets completed and the details of the completed transaction are sent by the stock exchange to the clearing corporation for settlement.
What are NSE and BSE? NSE and BSE are the two major stock exchanges in India. Much like a one-stop shop for, say the latest gadgets, A stock exchange is a centralized location where you can buy or sell the stocks listed. The BSE, established in 1875, is India’s oldest stock exchange. The NSE, established in 1992, is India’s biggest stock exchange. There are around 4,000 shares listed on the BSE. And around 1,600 shares listed on the NSE. The top 30 shares on the BSE make up its benchmark index – SENSEX. And the top 50 shares on the NSE make up its benchmark index – NIFTY 50. What are these indices? Well, as you've seen in the previous chapter, they are indicators that help you measure the market or a section of it. To learn all about trading on the stock exchange, continue with the upcoming chapters on Smart Money from Angel Broking.