Stock / Share Market
by 5paisa Research Team Last Updated: 2022-09-20T11:58:49+05:30

Introduction

The stock exchange is an electronic platform that enables the trading of various financial instruments such as stocks, derivatives, bonds, exchange-traded funds (ETFs), etc. It forms a marketplace for trading and listing securities between investors and traders with the support of brokers.

In the Indian equity share market, two major stock exchanges manage the bulk of the trading volume of listed securities- the Bombay Stock Exchange - BSE, and the National Stock Exchange - NSE. 

The largest market exchanges in India, BSE and NSE are among the largest stock exchanges in Asia, after the market exchanges of Hong Kong, China and Japan.

The key points of difference between NSE and BSE include Market capitalisation, the number of listed companies, traded products, liquidity of listed securities, benchmark index etc.

What is NSE?

The NSE (National Stock Exchange) is India’s biggest stock exchange market by market capitalization. It was founded in 1992, recognized as a stock exchange in 1993, and was the first to establish a fully automated and electronic or screen-based trading system in India. 
    
Eventually, the electronic trading system replaced the previously used extensive paper-based trading system making the distribution of physical share certificates outdated.

National Fifty, or NIFTY, is the benchmark index of the stock exchange. Launched during 1995-96, NIFTY derives its value from fifty of the most frequently traded companies in market capitalisation, listed on the National Stock Exchange. 

The Nifty 50 tracks the fifty largest and most liquid stocks from the sixteen hundred stocks listed on the NSE. The largest fifty stocks belong to companies representing different industrial sectors collectively representing the Indian economy.

The most recent felicitation of the National Stock Exchange as the largest exchange in the world is in the derivatives segment in terms of the number of contracts traded.  Over the last twenty years, NSE has also been recognized as the Index provider and the ETF Index provider of the year.

What is BSE?

The Bombay Stock Exchange, established in 1875, was originally recognized as “The Native Share and Stock Brokers Association.” It is the older counterpart to the NSE and the oldest stock exchange in Asia. It was only in 1995 that BSE shifted from the open-cry system to fully electronic trading BOLT.

The BSE, similar to NSE also has its benchmark index, SENSEX (Sensitive Index). It was introduced in 1986 and is a weighted average value of the top thirty companies listed on the stock exchange. SENSEX is internationally traded on many leading exchanges in China, Russia, Brazil and South Africa, as well as on Eurex.

The Bombay Stock Exchange has various subsidiaries. The BSE SME platform is the largest in India, with more than 250 companies listed.

India’s largest mutual fund platform BSE Star MF has more than 2.7 million transactions and more than 2 lakh new SIPs every month. BSE Bond is also a market leader in the bond market.

Difference between NSE and BSE

BSE is one of the oldest stock exchanges in Asia, established in 1875, whereas NSE was incorporated in 1992. The key points of NSE and BSE difference are as follows:

 

 

National Stock Exchange

Bombay Stock Exchange

Benchmark Index

NIFTY 50

SENSEX

Index comprises of

Top 50 companies based on market capitalization

Top 30 companies

Listed Companies

1696 listed companies

5749 listed companies

Market Capitalisation

2.27 Trillion

2.1 Trillion

Liquidity

High Liquidity

Low Liquidity

SME Platform

NSE Emerge

BSE SME

Traded Products

NSE trades in - Equity, Currency and Commodity Derivatives, ETFs, MFS, SLB Schemes, Corporate Bones, IPOs, Institutional Placement Program (IPP) and Offer for Sale

BSE trades in - Equity, Currency and Commodity Derivatives, ETFs, MFs, Corporate Bonds, IPOs and Offer for Sale.

Summary

NSE and BSE are the major stock exchanges in India, where various financial instruments like stocks, derivatives, ETFs, Mutual Funds, corporate bonds etc., are listed and traded over an electronic platform. 

NSE is India’s biggest stock exchange in terms of market capitalisation. Its benchmark index is NIFTY 50, which tracks the fifty largest and most liquid stocks out of the 1600 plus listed companies on NSE. Similarly, BSE’s benchmark index is SENSEX which tracks the largest thirty most established companies on the Bombay Stock Exchange.

Frequently Asked Questions

Q.1: Can I buy in BSE and sell in NSE?
Ans: An investor cannot buy a stock on BSE and sell it on NSE on the same day or vice versa. However, they can sell stocks bought on BSE on NSE after a gap of two trading days from the date of purchase and vice versa. Hence stocks are added to the investor’s Demat account (Holdings) after T+2 days of purchase.

Q.2: Why there is a price difference between NSE and BSE?
Ans: There is a difference in price for the same stock on NSE and BSE, which depends on the liquid nature of the stock. In the case of illiquid stocks, the price difference may be higher. Stock liquidity is also a key BSE vs NSE difference.

Q3: Which is bigger NSE or BSE?
Ans: NSE is a bigger stock exchange between NSE and BSE in terms of trading volume. It is also larger than BSE in terms of market capitalisation. 
 

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