Stock exchanges are like markets where you can buy and sell things like company shares, bonds, and stuff like that. They’re places where companies can put their shares up for sale to get more money, and they’re also where regular people like you and me can buy those shares and hopefully make some money. In India, the two big stock exchanges are NSE and BSE, and they’re both separate from each other. Now, let’s talk about how NSE and BSE are different.
What is NSE?
The National Stock Exchange, known as NSE, is India’s biggest stock exchange when you look at how much all the companies are worth. It started in 1992 and was one of the first places to use computers for buying and selling stocks. NSE is based in Mumbai, and it measures how well the stock market is doing using something called the Nifty 50 index, which looks at the 50 most important stocks from different types of businesses.
What is BSE?
BSE stands for the Bombay Stock Exchange, and it’s the oldest stock exchange in India, starting way back in 1875. It’s got a special status in Indian law, and it’s also famous because it was the first stock exchange in all of Asia. It’s known worldwide as one of the important stock exchanges. In 1986, BSE started something called the S&P BSE Sensex, which looks at the top 30 companies listed on the Bombay stock exchange to tell how well the stock market is doing.
Similarities between BSE and NSE
Now that we understand what BSE and NSE are, let’s see what they have in common:
- Many people like to use both of these places for investing.
- You can buy and sell stocks on both.
- They let you trade not just stocks, but also other things like bonds, mutual funds, ETFs, stuff like gold, and special kinds of contracts for the future.
- People who make sure everything is fair and square at BSE and NSE are called SEBI, and they watch over both of these places.
- They both use computers for trading.
- Both NSE and BSE have their main offices in Mumbai.
Difference between BSE and NSE
Here’s a breakdown of the key differences between the two:
- Full Form:
NSE: National Stock Exchange
BSE: Bombay Stock Exchange
- Year of Formation:
NSE was established in 1992.
BSE has a longer history, dating back to 1875.
- Benchmark Index:
NSE’s benchmark index is Nifty 50.
BSE’s benchmark index is S&P BSE Sensex.
- Companies in the Index:
NSE’s Nifty 50 includes 50 companies.
BSE’s Sensex comprises 30 companies.
- Number of Listed Companies:
NSE lists over 5,000 companies.
BSE lists approximately 2,000 companies.
- Transaction Charges:
NSE transaction charges vary but are typically around 0.00335% on turnover for equity delivery and intraday trades, with different rates for derivatives and options.
BSE transaction charges are about 0.00375% for the turnover value of buying and 0.00275% for the turnover value of buying and selling.
- Global Ranking:
NSE ranks 11th among the world’s largest stock exchanges.
BSE ranks 10th among the world’s largest stock exchanges.
- Electronic Trading Platform:
NSE adopted electronic trading right from its inception in 1992.
BSE introduced the electronic trading platform known as BOLT (BSE On-Line Trading) in 1995.
- Trading Volume:
NSE typically experiences very high trading volumes.
BSE’s trading volumes are lower compared to NSE.
- Online Trading System:
NSE introduced online trading in 1992.
BSE introduced its online trading platform in 1995.
- Range of Products Traded:
Both NSE and BSE facilitate trading in equity stocks, equity derivatives, currency derivatives, commodity derivatives, mutual funds, exchange-traded funds, offer for sale, corporate bonds, and other financial instruments.
NSE generally has higher liquidity due to its higher trading volumes.
BSE offers comparatively lower liquidity.
NSE has a wide network spanning over 1,500 cities.
BSE’s network covers around 450 cities.
- Official Website:
NSE’s official website is www.nseindia.com.
BSE’s official website is www.bseindia.com.
How has NSE become more popular than BSE?
Over time, NSE became the number one stock exchange in India because of a few important reasons:
NSE had better, faster, and more reliable computers for trading, which made it easier for people to buy and sell stocks.
NSE had more types of things you could buy and sell, like special investments called derivatives. This attracted more people who wanted to invest.
3. Being Clear
NSE was really good at telling people what was happening with the stock market. This made investors feel safe and kept bad activities from happening.
4. Lots of Trading
NSE was known for having a lot of trading going on, which means people were buying and selling stocks a lot. This made it easier for investors to do their thing.
5. Working Well
NSE did things to make sure the stock market worked smoothly, like having rules to stop trading when things got crazy. This made the market more stable.
6. Rules in Favor
The people in charge of making rules for stock exchanges in India made rules that helped NSE grow faster. For example, they let NSE introduce new things to trade without asking for permission first.
So, NSE became the top choice for many because of its good technology, lots of options, clear communication, active trading, smooth operations, and supportive rules. This made it more popular than BSE.
Which platform to choose?
Both NSE and BSE let you trade different kinds of stuff you can invest in. NSE has a lot more trading happening, which helps figure out the right prices for things. Even though it has fewer stocks in its main list, the high trading makes it better for trading.
But remember, some stocks are only on BSE. So if you want those, you have to use BSE.
You can check out the stocks on both and pick the one that works for you. Or you can do a clever thing called arbitrage, where you buy a stock from NSE and sell it on BSE. Sometimes, the price is different on both, depending on how easy it is to buy and sell that stock.
Before you decide which platform to use, it’s a good idea to learn about the differences between BSE and NSE. Understand how these platforms operate and then start trading on them. Both of these exchanges can have times when the market goes up and down a lot, which is called volatility. So, if you want to trade on these platforms, it’s a good idea to be comfortable with taking some risks.