What Is The Difference Between NSE and BSE?

What Is The Difference Between NSE and BSE?

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Jaya
Jaya Sharma
Assistant Manager - Content
Updated on Jun 18, 2024 11:32 IST

Before discussing the difference between NSE and BSE, we must know that these are the two major stock exchanges in India where companies are listed. These stock exchanges have been operational for decades. In this article, we will determine the difference between NSE and BSE on different parameters.

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Table of Contents

Difference Between NSE and BSE: NSE vs BSE

BSE stands for Bombay Stock Exchange and NSE stands for National Stock Exchange. The following table represents the difference between NSE and BSE:

Differences NSE BSE
Definition NSE is the biggest stock exchange in India. It has a fully automated, electronic, and screen-based trading system. BSE is the oldest and the first stock exchange in India. It offers high-speed trading to investors.
Establishment 1992 1875
Rank 11th biggest stock exchange in the world. 9th biggest stock exchange in the world
Benchmark Index NIFTY 50  SENSEX 
Network NSE has expanded to more than 1500 cities BSE has a network covering 450 cities
Companies Listed 1700 companies 5800 companies 
Market Difference Big market size Small market size
Market Capitalization $4.63 trillion (February, 2024) $4.5 trillion (February 2024)
Liquidity Higher liquidity as compared to the BSE BSE has low liquidity compared to NSE
Products Traded Equity, Currency, Corporate Bonds, Mutual funds, Traded funds, Initial Public Offering (IPO), Institutional Placement Program (IPP), Offer for Sale, Security lending & Borrowing Scheme Equity, Currency, Mutual funds, Traded Funds, Corporate Bonds, Initial Public Offering (IPO), Commodity Derivatives, Offer for Sale
Trading Volume Higher Lower

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About NSE

Established in the year 1992, NSE is a leading stock exchange in India which is located in Mumbai. Trading in NSE was initiated by the year 1994 along with the launch of the wholesale debt market and cash market segment. It was the first dematerialized electronic exchange in India. NSE provided a completely automated screen-based electronic trading system. Through this system, investors were able to access modern trading facilities. The market capitalization of NSE is more than $4.63 trillion.

  1. It is the largest Indian financial market and the fourth-largest global market by trading volume.
  2. It is the largest private wide-area network in the country.
  3. The NSE is the first electronic limit order book for trading derivatives and ETFs.

According to Futures Industry Association, NSE became the largest derivatives exchange in 2021 in terms of the number of contracts that are traded. The stock change currently conducts transactions in the wholesale debt, derivative and equity markets. 

The objective of NSE was to increase transparency within the Indian capital market. The exchange supports 3000+ VSAT terminals due to which it has become the largest wide-area network in India. NIFTY 50 index is also a part of this stock exchange that tracks assets in the Indian equity market. 

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Benefits of the NSE

  • It is one of the premier marketplaces for those companies that want to get listed on major exchanges. 
  • High-volume trading and applications of automated systems bring transparency in the trade matching and process of settlement.
  • The trading system in NSE provides post-trade information. It also displays five best buy and sell orders.
  • The trading system displays the total number of buyable and sellable securities.
  • High order processing speed results in liquidity and the best available prices.
  • It has short settlement cycles which reduces any delays.

About BSE

BSE stands for Bombay Stock Exchange. It is the oldest stock exchange which has been established in the year 1875. This electronic stock exchange is also known as the tenth oldest stock exchange in the world. It is one of the world’s largest stock exchanges with a market capitalization of more than $4.3 trillion. The Native Share and Stock Brokers’ Association established this exchange. At present, it lists more than 6000 companies. The following securities are listed on the BSE:

  • Stocks
  • Stock futures
  • Stock options
  • Index futures
  • Index options
  • Weekly options

Benefits of BSE

  • The BSE played a significant role in developing India’s capital markets.
  • The exchange provides an efficient platform for the corporate sector so that they can raise investment capital.
  • It has an efficient electronic trading system that enables fast trade execution.
  • Investors can trade in currencies, equities, derivatives, debt instruments and mutual funds.
  • It offers crucial capital market trading services such as clearing, settlement, investor education and risk management.

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Similarities between NSE and BSE

While we have already taken a look at the difference between NSE and BSE, we will look at the similarities between these two stock exchanges:

  1. Trading Platforms: There are several difference in NSE and BSE but both NSE BSE are places where you buy and sell i.e. trade shares of companies.
  2. Regulated by SEBI: They follow rules set by the Securities and Exchange Board of India (SEBI).
  3. Market Indices: BSE has SENSEX, and NSE has NIFTY 50, which shows how well the companies on each exchange are doing.
  4. Use Technology: Both use electronic systems for trading.
  5. Global Participation: Investors from around the world can trade on both exchanges.
  6. Offer Various Products: They allow trading in stocks, bonds, derivatives, and more.
  7. Open to All Investors: Both individual and institutional investors can trade.

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Which is Better Between NSE and BSE?

Both stock exchanges are secure financial markets for trading. As an investor, you need to find a suitable market for yourself. If you are a beginner, it is advisable to start with BSE. NSE, on the other hand, requires experience in trading since it is a good market for day traders and risk-takers. NSE is better in terms of liquidity which means the ease of converting securities into cash.

BSE vs NSE: Conclusion

Hope this article has explained to you the detailed BSE and NSE differences. In conclusion, here is the summarized difference between BSE and NSE:

  • Dimensions: The NSE stands as the premier stock exchange in India, whereas the BSE holds the distinction of being the oldest in Asia.
  • Portfolio: The BSE boasts a more extensive portfolio with over 5,500 listed entities, offering a broader spectrum of trading options compared to the NSE, which hosts around 1,600 companies.
  • Operational Mechanism: While the NSE operates through a fully automated trading system, the BSE facilitates swift trading transactions.
  • Benchmark Indices: The benchmark index for NSE is NIFTY, encompassing the leading 50 stock indices, whereas the BSE utilizes the SENSEX as its benchmark, featuring the top 30 stock indices.
  • Inception: The NSE, inaugurated in 1992, pioneered a modern, transparent, and automated platform in the Indian stock market sector. Contrarily, the BSE, founded in 1875, received official recognition in 1957.
  • Affiliates: The BSE operates several affiliates, including but not limited to BSE SME, BSE Star MF, and BSE Bond.

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FAQs

Can you buy stocks from BSE and sell them in NSE?

Yes, you can sell stocks in NSE after buying them from BSE. A Demat account is mandatory for it.

What sets NSE and BSE apart in terms of trading mechanisms?

NSE operates through a fully automated trading system, providing efficient and automated trading facilities. BSE, on the other hand, offers high-speed trading, which emphasizes swift transaction execution.

What are the benchmark indices for NSE and BSE?

NSE's benchmark index is NIFTY, representing the top 50 stock indices. BSE utilizes the SENSEX as its benchmark, comprising the top 30 stock indices.

Do NSE and BSE have subsidiaries?

Yes, BSE operates several subsidiaries, including BSE SME, BSE Star MF, and BSE Bond, which offer specialized services and trading platforms.

Which exchange is more significant in terms of trading volume?

NSE generally has a higher trading volume compared to BSE, primarily due to its automated trading system and broader investor base.

How do NSE and BSE contribute to the Indian stock market?

NSE and BSE both play pivotal roles in facilitating stock trading and investment in India, providing platforms for companies to raise capital and investors to trade securities.

About the Author
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Jaya Sharma
Assistant Manager - Content

Jaya is a writer with an experience of over 5 years in content creation and marketing. Her writing style is versatile since she likes to write as per the requirement of the domain. She has worked on Technology, Fina... Read Full Bio