One of the significant confusions for most investors within the Indian stock market is the coexistence of two giant exchanges, the Bombay Stock Exchange(BSE) and the National Stock Exchange(NSE). Therefore, this makes it quite relevant that an investor familiarize himself with the differences and the featured attributes to make proper investment decisions.
The Bombay Stock Exchange is the oldest in Asia, with a various listed company base and the famous Sensex index. Conversely, the National Stock Exchange had been very upfront in technology and efficient trading systems with the famous Nifty 50 index. Each of these exchanges has some quite visible benefits and specific characteristics that shape the trading experience and opportunities.
The following blog will be done to explain what BSE and NSE are by detailing their history, structure, and key features. It will then point out some of the essential advantages that each of these exchanges has over the other in terms of volumes, market reach, and technological innovations.
The two main exchanges of the stock market, which are the Bombay Stock Exchange, or BSE and the National Stock Exchange, or NSE. Today we will talk about the similarities and differences between NSE and BSE.
What is NSE?
The headquartered NSE in Mumbai is India’s largest stock exchange based on market capitalization. It was established in 1992 and with it, electronic trading began in India. The benchmark of the NSE is NSE 50, which is based on the top 50 companies listed on the NSE.
The top 50 is based on the Free Float Market Cap Weighted method. NSE reviews its Nifty indices composition every 6 months and changes if required according to the set criteria. On the other hand, BSE is 117 years older than NSE.
NSE was established in 1992 by major financial institutions like the Industrial Development Bank of India, Life Insurance Corporation of India, and General Insurance Corporation of India. At its inception, it used to trade primarily in government securities; however, soon, it expanded its operations to equity and derivatives.
Over the years now, NSE has innovated much and adapted to changing market conditions, increasing its innovative portfolio of products and services to meet the evolving needs of customers.
It is through the working of NSE that investors in the Indian financial system get an excellent platform to sell and buy securities. Its presence increased liquidity, making markets both ways easier for investors to enter and exit any position. Apart from that, its robust infrastructure and regulatory framework assure transparency and efficiency in trading activities.
The National Stock Exchange of India Limited is the biggest in India, servicing both ends of the country’s financial markets. This exchange was set up in 1992 and happens to be among the prime exchanges where the trading of several financial instruments such as equities, derivatives, and commodities takes place. We will take a step further into the world of NSE—its history, key features, and significance in the Indian financial landscape—through this blog post.
Key Features and Services
NSE offers a range of services and products, including:
- Equities: trading in shares of listed companies.
- Derivatives: This refers to trading in futures and options contracts.
- Commodities: Agricultural and metal commodities trading
- Currency Derivatives: Dealing in foreign exchange contracts.
- Mutual Funds: Trading in different mutual fund schemes.
It also provides several trading platforms, one is NSE Now, for real-time market data with trading facilities.
What is BSE?
It was established in 1875. It is not India’s but the first stock exchange in Asia and it is counted among the top stock exchanges in the world. BSE’s benchmark is SNP BSE Sensex, which came in 1986. Sensex is based on the stock performance of the top 30 companies listed on BSE. Like NSE, Free Float Market Cap Weighted method is used method is used to include companies in the benchmark index.
It is regulated by the Securities and Exchange Board of India (SEBI) and functions transparently in a very regulated environment to undertake fair business practices and protect investors.
The BSE forms an integral part of the Indian financial scene by providing an avenue for companies to raise capital and investors to invest in the market. The BSE is like a barometer of India’s economic health; hence, it is closely watched by investors and analysts across the globe. It has substantially contributed to the economic development of the country. By its contribution to the growth of capital markets, it has contributed to the economy as a whole.
Key Features Of BSE
Some of the key features of BSE include:
- Primary/Secondary Market: Through the BSE, trading takes place in the primary and secondary markets.
- Listing and Trading: The companies apply for listing on the BSE. On getting listed, the shares of these companies become tradeable on the exchange.
- Regulations: It provides regulation and supervision; hence, BSE functions under the regulatory framework of SEBI to protect fair trading practices and the interest of investors.
- Indices: Khoja The BSE is known for its benchmark Indices like the SENSEX – tracking 30 major and actively traded stocks.
- Technological Advancements: Modernisation of systems has been adopted by the BSE, and today, it allows for electronic trading and online investments.
