Definition
The NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are both major stock exchanges in India. The key difference between them lies in their establishment, with BSE being the oldest stock exchange in Asia (established in 1875), while NSE was founded in 1992 and was the first exchange in the country to use electronic or screen-based trading. Additionally, the NSE has a broader national presence and a larger volume of trades per day, while the BSE is mostly concentrated in Western India.
Key Takeaways
- One of the major differences between NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) is their establishment. BSE, founded in 1875, is the oldest stock exchange in Asia. On the contrary, NSE was established in 1992 making it much younger than the BSE.
- Another significant difference is their indexes. The BSE’s primary index is the SENSEX which includes the top 30 traded stocks, while at the NSE, the primary index is NIFTY which comprises 50 actively traded stocks from various sectors.
- The third crucial difference between the two lies in their reach and influence. NSE is more technologically advanced and it has a broader national reach. Meanwhile, BSE is known for having a larger number of listed firms. However, in terms of turnover and trades, NSE comes out tops.
Importance
Understanding the differences between the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) is important because they are the two major stock exchanges in India, each with its unique characteristics.
The BSE, established in 1875, is the oldest stock exchange in Asia, while the NSE, founded in 1992, is the largest in India.
These two exchanges not only differ in age and size but also in trading volumes, listed companies, and global presence.
Also, the BSE uses the SENSEX as its stock market index, while the NSE uses the NIFTY.
Therefore, investors can make more informed decisions by understanding the variations between the two leading platforms, which ultimately helps in diversifying their investment portfolio and risk management.
Explanation
The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are two of the largest and most significant stock exchanges in India, both serving vital but varied purposes. The NSE, established in 1992, revolutionized Indian financial markets by leveraging technology to increase accessibility, offering a fully automated, screen-based trading system. Its primary aim has been to foster a nationwide trading facility for various types of securities, bring transparency to the Indian capital market, and achieve a shift from open outcry to electronic trading system.
NSE ensures its market reflects a true and fair picture of the market conditions and that investors are safeguarded from abusive and manipulative practices. On the other hand, the BSE, operating since 1875, is the oldest stock exchange in Asia. Excelling in various areas of the capital market, its purpose is to facilitate efficient trading and increase confidence among investors.
BSE has actively striven to create a robust platform for the trading of equity, debt instruments, derivatives, and mutual funds. It offers a diverse range of services that include risk management, clearing, settlement, market data services, and education. By providing an efficient and transparent market for trading, BSE stimulates growth and leads to wealth and capital creation.
Both the NSE and BSE are critical for the healthy functioning of India’s market economy and offer distinct benefits to the investor’s community.
Examples of Differences Between NSE and BSE
Number of Listed Companies: BSE (Bombay Stock Exchange), established in 1875, is one of the oldest stock exchanges in Asia. It has over 5000 listed companies. On the other hand, NSE (National Stock Exchange), founded in 1992, is relatively new but has quickly gained prominence. It has a little over 1600 listed companies due to its stringent listing requirements.
Market Capitalization: BSE has a larger market capitalization compared with NSE, mainly due to the sheer number of companies listed on its platform. However, NSE has a larger volume of shares traded daily because it’s widely preferred by institutional investors.
Indexes: BSE’s primary index is the BSE SENSEX which includes top 30 companies and gives indications about India’s economy and business environment. Meanwhile, NSE’s main index is Nifty50, encompassing 50 major listed companies across 14 sectors. It offers a broad-based benchmark, reflecting the Indian equity market’s performance.Remember, both BSE and NSE represent the Indian equity market, and their primary objective is to facilitate trading services to investors and traders. Their differences largely come down to their age, number of listed companies, market capitalization, and the indexes they house.
FAQs on Differences Between NSE and BSE
What are NSE and BSE?
The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are two of the largest stock exchanges in India. Both platforms function as a marketplace for trading securities, but have their unique characteristics and features.
What is the primary difference between NSE and BSE?
The primary difference between NSE and BSE lies in their origin and size. BSE, established in 1875, is the oldest stock exchange in Asia, while NSE was established in 1992. As of current data, BSE is the world’s 10th largest stock exchange with over 5000 listed companies, whereas NSE is the world’s 11th largest stock exchange with approximately 2000 listed companies.
Why is the NSE more popular than the BSE for derivatives trading?
The NSE is more advanced technologically and began focusing on derivatives trading earlier than BSE. This lead time coupled with a strong technology infrastructure, allowed the NSE to gain a significant market share in derivative trades, making it more popular for this type of trading.
What are the indices associated with BSE and NSE?
The primary index of BSE is the Sensex which includes the shares of 30 financially sound companies. On the other hand, the primary index of NSE is the Nifty which includes the shares of the top 50 companies.
Can a company be listed on both NSE and BSE
Yes, a company can indeed be listed on both NSE and BSE provided it fulfills the listing criteria set by both the exchanges.
Related Entrepreneurship Terms
- Market Capitalization: NSE has a larger market capitalization compared to BSE.
- Number of Listings: BSE, being older, has more companies listed while NSE, despite being younger, sees more trading.
- Index: Each exchange has a benchmark index; NSE has Nifty while BSE has Sensex.
- Trading Speed: NSE’s trading system, called NEAT, is faster than that of BSE.
- Global Presence: NSE has a greater global presence and recognition compared to BSE.
Sources for More Information
- Investopedia: A web platform dedicated to providing simplified, reliable, and comprehensive financial information and explanations.
- Economic Times: An Indian English-language business-focused daily newspaper also known for its in-depth articles and research pieces about the financial world.
- Moneycontrol: A site with a focus on the Indian finance industry including market trends, trading tips, and stock information.
- Business Standard: An Indian English-language daily edition newspaper, known for its financial news and discussion.
