• HDFC securities
• 22 Feb 2023
• Knowledge Centre

 

 A stock exchange or a bourse is a marketplace where financial securities such as shares, bonds and derivative instruments like futures and options are bought and sold. They act as a stock trading platform  for companies to raise capital from investors who can trade in the securities issued by companies through stockbrokers. There are two prominent stock exchanges in India, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Although both of them serve the same function, let us check out the difference between NSE and BSE in this article.

Bombay Stock Exchange (BSE)

The Bombay Stock Exchange is Asia’s oldest stock exchange. It was established in 1875 as “The Native Share & Stock Brokers Association” and is located at Dalal Street, Mumbai.

The primary index of the Bombay Stock Exchange, Sensex, was launched in 1986. It is the first equity index in the county. Sensex comprises the top 30 stocks listed on the BSE. Apart from Sensex, there are several other important indices such as BSE 100, BSE 500, BSE Smallcap, BSE Midcap etc.

The BSE shifted to a fully electronic trading system (BOLT) in 1995 from the earlier open-cry system. There are more than 5,000 companies listed on the BSE. The exchange offers trading in products like equities, commodities, equity derivatives, mutual funds,currency derivatives, etc.

National Stock Exchange (NSE)

The National Stock Exchange (NSE) was established in 1992 and began operations in 1994. It was the first exchange in India to introduce an electronic and fully automated trading system.

In the year 1997, India’s leading benchmark index, Nifty50 was introduced by the NSE. This index consists of the top 50 stocks listed on the NSE. Other indices on NSE are Nifty Bank, Nifty Midcap 150, Nifty Next 50 etc.

NSE offers trading in equity, equity derivatives, currency derivatives, bonds, commodities, etc. NSE is now the world’s largest derivatives exchange in terms of volumes traded. There are nearly 2,000 listed companies on the NSE.

Here are some of the key differences between NSE and BSE

	National Stock Exchange (NSE)	Bombay Stock Exchange (BSE)
Founded	The NSE was founded in 1992.	The BSE is the oldest exchange in Asia and was established in 1875.
Index	The benchmark index for the stocks listed on the NSE is the Nifty50	The benchmark index for the stocks listed on the BSE is the Sensex
Number of listed companies	There are nearly 2,000 companies listed on the NSE	There are more than 5,000 companies listed on the BSE
Volume and Liquidity	The volume and liquidity are much higher on the NSE.	The trading volume on BSE is comparatively than NSE

 

Both BSE and the NSE are prominent stock exchanges in India. As an investor, one can trade or invest in stocks in either of these exchanges though it is important to know the difference between NSE and BSE. Factors like the number of stocks listed and overall liquidity and volumes should be considered before investing. Ultimately, the decision of which exchange to use is based on the individual investor’s preferences and needs.