The stock exchange is a marketplace where buying and selling of securities take place between investors or traders. In India, there are two main stock exchange markets: National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
Usually, everyone knows that both BSE and NSE are related to securities or financial instruments like shares, bonds, etc. But only a few people know the difference between these two stock exchanges.
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Bombay Stock Exchange (BSE)
BSE is an Indian exchange located at Dalal Street, Mumbai. It was founded in the late back 19th century by Mr. Premchand Roychand, who was one of the most top and influential businessmen at that time. He is also known by names such as Cotton King, the Bullion King, or the Big Bull because he builds a fortune in the stockbroking business.
Although BSE is the oldest stock exchange of Asia formerly known by the name “The Native Share & Stock Brokers Association” in 1875.
In addition, the story of BSE starts back in 1855 when 22 stockbrokers gather together in front of Mumbai Town Hall, and also these locations change multiple times as the number of brokers increase. In 1874, these brokers group moved to Dalal Street, Mumbai.
1957, Indian Central Government recognized BSE officially under the Securities Contract Regulation Act, 1956 as the premier stock exchange of the country.
1986, Sensex was introduced as the first equity index with the top 30 trading countries in more than 14 sectors of the Indian economy. In 1995, BSE Online Trading System (BOLT) was introduced.
BSE offers various services such as market data service, risk management, Central Depository Service Limited (CDSL), etc.
As of April 2018, BSE is recognized as the 10th largest stock exchange in the world with an overall market capitalization of over $2.3 trillion.
Some major indices of BSE are BSE 500, BSE 100, BSE 200, BSE MIDCAP, BSE SMALLCAP, BSE PSU, BSE Auto, BSE Pharma, BSE FMCG, BSE Metal, etc.
National Stock Exchange (NSE)
NSE came into existence in 1992 to provide the latest, modern, fully automated electronic trading system. It offers the investor a facility of easy trading with an advanced electronic system that removes paperwork in the trading.
The managing director and chief executive officer of NSE are Mr. Vikram Limaye.
In 1993, NSE was set up as a registered company under the Securities Contract Regulation Act.
In the year 1995, another forum National Securities Depository Limited (NSDL) was formed to provide depository service to the shareholders. It allows investors security to hold and transfer their shares and bonds electronically with increased efficiency.
Another milestone, Nifty 50 was set up by the NSE which lists the top 50 companies from all the sectors.
Another important thing to know, in the year 1994 NSE technology holds 2 orders per second. Whereas, in the year 2021 this limit was increased to 60 orders per second.
After continuous improvement, the settlement cycle has been reduced from T+3 days to T+2 days or also T+1 days in some specific financial products.
Some major indices of Nifty are CNX Nifty Junior, CNX 100, S&P CNX 500, CNX Midcap, etc.
Difference between BSE and NSE
The major difference between BSE and NSE are:
|Introduction||It is the oldest stock exchange marketplace not just for India but Asia as well, which offers high-speed trading to its customers.||It is the biggest stock exchange marketplace in India along with a front runner in the introduction of the fully automated, electronic trading system across the country.|
|Benchmark index||Sensex 30||Nifty 50|
|Total listed companies||5749||1696|
|Market Capitalization||Around 2.3 trillion||Around 2.27 trillion|
|Network||Over 450 cities||Over 1500 cities|
|Liquidity||Comparably lower than NSE||High Liquidity|
|Headquarters||BSE is located in Mumbai.||BSE is also located in Mumbai.|
|Platform||BSW SME||NSE Emerge|
In which index an individual should invest?
It will totally depend on the companies an individual is looking to invest. Because some companies (mostly small-cap) are not listed on both the BSE and NSE.
However, if any company is listed on both the BSE and NSE, it will completely depend on individual choice or can opt for both the platform.
In addition, BSE is more suitable for beginners, while NSE is suitable for seasoned traders and investors. Both the indices differ from each other, the choice will depend upon the individuals and knowledge of the market.
Every day lakhs of investors and brokers trade on both the stock exchange. The main motive of BSE and NSE is to facilitate financial trading services all across India.
To conclude, both the stock exchange, National Stock Exchange, and Bombay Stock Exchange are two major indices of the Indian market. Every day, lakhs of brokers and investors trade on these stock exchanges. The BSE with a 5000+ portfolio of listed companies is considered an ideal platform for beginners. Whereas, NSE is a perfect platform for seasoned investors and traders.
Frequently Asked Questions
BSE is more suitable for beginners, while NSE is suitable for seasoned traders and investors. Both the indices differ from each other, the choice will depend upon the individuals and knowledge of the market.
Yes, it is possible to buy in BSE and sell in NSE. There are minimal changes in the price listed on these stock exchanges.
Yes, there is a slight difference in the stock price of NSE and BSE. For example, If XYZ stock is trading at Rs 50 on NSE, it may be trading at Rs 49.5 on BSE depending on the liquidity of the stock.
There are 5749 companies listed on BSE and 1696 companies are listed on NSE.
Yes, a company can be listed on both the BSE and NSE. Usually, most big companies are listed on both indices.
NSE’s stock index is Nifty which gives the top 50 stock index, whereas, BSE’s stock index is Sensex which gives the top 30 stock index.
Stock Exchange Sensitive Index (SENSEX) is the stock market index for BSE. National Stock Exchange Fifty (NIFTY) is the stock market index for NSE.
NSE is preferred over BSE due to more liquidity. This is the reason for more buyers and sellers in the NSE marketplace.