Difference Between NSE and BSE Stock Exchange

Difference Between NSE and BSE Stock Exchange – How to Choose an Exchange for Your Trades

Difference Between NSE and BSE Stock Exchange

Stock exchanges are marketplaces wherein you can trade in listed shares and other securities like bonds and commodities. Stock exchanges allow companies to list their stock for public subscription to raise additional funds for the business. On the other side, stock exchanges serve as a trading platform for investors where they can earn and create wealth. The two leading stock exchanges in India are the NSE and BSE. Both of these are independent stock exchanges. Let’s delve into the difference between NSE AND BSE Stock Exchange.

What is NSE?

Short for National Stock Exchange, NSE is the largest stock exchange in India on the basis of market capitalisation. NSE was founded in 1992, and it brought with it the electronic mode of trading in stocks. Headquartered in Mumbai, NSE uses the NIFTY 50 index as its benchmark, which comprises the top 50 stocks of the share market across different sectors.

What is BSE?

BSE is an abbreviation for the Bombay Stock Exchange. It is the oldest stock exchange in India which was founded in 1875. It has earned permanent recognition under the provisions of the Securities Contract (Regulation) Act, 1956. BSE also boasts of being the first stock exchange in Asia and is recognised among the world’s leading stock exchanges. In 1986, BSE introduced the S&P BSE SUNSEX, which consists of stocks of the top 30 companies listed on the Bombay stock exchange.

Similarities between BSE and NSE

Now that you know what BSE and NSE are, here’s a look at their similarities:

  • Both these exchanges are popular among investors.
  • Both allow stock trading.
  • Besides equity, you can trade in bonds, mutual funds and ETFs, commodities, derivatives, futures and options, and currencies on these exchanges.
  • BSE and NSE are regulated by the Securities and Exchange Board of India (SEBI).
  • Both these exchanges have electronic trading facilities.
  • The headquarters of NSE and BSE are both located in Mumbai.

Difference between BSE and NSE Stock Exchange

The similarities between NSE and BSE are not limited to the points mentioned above. However, these exchanges are different from one another too. Take a look at the difference between NSE and BSE Stock Exchange.

Points of difference NSE BSE
Full form National Stock Exchange Bombay Stock Exchange
Formed in 1992 1875
Benchmark index Nifty 50 S&P BSE Sensex
Companies in the index 50 30
Companies listed on the exchange 5,000+ Around 2,000
Transaction Charge The transaction charges are 0.00335% on turnover (buy & sell) for equity delivery and intraday trades, 0.00195% on turnover for futures, 0.053% on premium value for options. The transaction charges are 0.00375% for the turnover value of buy and 0.00275% for the turnover value of buy and sell.
Ranking in the world NSE ranks 11th among the largest stock exchanges in the world. BSE ranks 10th among the largest stock exchanges in the world.
Use of the electronic trading platform NSE started the electronic trading platform right from its inception in 1992. BSE incorporated the electronic trading platform called BOLT (BSE On-Line Trading) in 1995.
Trading volume Very high Lower than NSE
Online trading system Introduced in 1995 Introduced in 1992
Products traded on the platform Equity stocks
Equity derivatives
Currency derivatives
Commodity derivatives
Mutual funds
Exchange-Traded Funds
Security Lending & Borrowing Scheme
Institutional Placement Program
Offer for Sale
Corporate Bonds
Equity stocks
Equity derivatives
Currency derivatives
Commodity derivatives
Mutual funds
Exchange-Traded Funds
Offer for Sale
Corporate Bonds
Liquidity NSE has higher liquidity as they trade more volume compared to BSE. BSE offers comparably low liquidity.
Market capitalisation ~ Rs. 15,77,07,127 cr. ~ Rs. 26,529,050.19 cr.
Network The network of NSE is over 1,500 cities. The network of BSE is 450 cities.
Official website address www.nseindia.com www.bseindia.com

How has NSE become more popular than BSE?

Over time, NSE beat the BSE to become the leading stock exchange in India due to several reasons listed below:

  1. Technology: NSE’s advanced and reliable technology infrastructure enabled faster and more efficient trading than BSE.
  2. Products: NSE offered a more comprehensive range of financial products, including derivatives, which attracted more investors and traders.
  3. Transparency: NSE strongly focused on transparency and disclosure, which instilled investor confidence and helped prevent fraudulent activities.
  4. Liquidity: NSE was known for higher liquidity levels, which meant more trading activity and higher trading volumes, making it easier for investors to buy and sell securities.
  5. Efficiency: NSE introduced several measures to increase efficiency, such as market-wide circuit breakers, which helped stabilise the market during times of volatility.
  6. Regulatory environment: The Securities and Exchange Board of India (SEBI) introduced several measures favouring NSE, such as allowing it to launch new products without prior approval, which helped NSE grow faster than BSE.

Overall, the combination of technology, product range, transparency, liquidity, efficiency, and regulatory environment made NSE the preferred stock exchange in India, increasing its popularity over BSE.

Which platform to choose?

Both NSE and BSE offer trading opportunities in different types of securities for Stock Exchange. NSE, however, boasts of a large trading volume making it easier for the price discovery mechanism to work effectively. This volume outweighs the limitation of the index containing only a few stocks and can allow better trading opportunities. However, some stocks are listed on the BSE only, so if you wish to invest in such stocks, you would have to trade on the BSE.

You can compare the stocks across both these platforms and then choose one as per your requirements. Alternatively, you can opt for arbitrage trading and buy stock from NSE and sell it in BSE. Moreover, there would be a difference in the price of the same stock on NSE and BSE platforms depending on the stock’s liquidity.

To wrap up

Go through the difference between NSE and BSE Stock Exchange  before you choose either platform. Understand how these platforms work and then trade in them. Both these exchanges experience market volatility, and so a healthy risk appetite is recommended if you wish to trade in them.

FAQs

Which is better, NSE or BSE?

The discussion of which is better, Difference between NSE and BSE Stock Exchange has no end. Hence, build a financial plan, look for stocks that to invest in according to the plan and budget, and choose whichever platform suits your needs and requirements the best. Alternatively, you can consult a financial advisor before you make any investment decision.

Can I buy in BSE and sell in NSE?

The simple answer to this question is yes. Shares can be bought on one exchange and sold on another only from the next day, i.e., on T+1. For trading purposes, you can buy on NSE and sell on BSE via intraday and deliver shares. It is called arbitrage trading.

Why is NSE preferred over BSE?

Most traders in India trade on NSE over BSE, as suggested by the trading volume difference in both stock exchanges, for several reasons. Some of these reasons include the following:

1. Technology: NSE has a more advanced and reliable technology infrastructure than BSE, allowing faster and more efficient trading.
2. Products: NSE offers a wider range of financial products, including derivatives, which attract more investors and traders.
3. Transparency: NSE strongly focuses on transparency and disclosure, which instils investor confidence and helps prevent fraudulent activities.
4. Liquidity: NSE is known for higher liquidity levels, meaning there is more trading activity and higher trading volumes, making it easier for investors to buy and sell securities.
5. Efficiency: NSE has introduced several measures to increase efficiency, such as market-wide circuit breakers, which help stabilise the market during times of volatility.

Overall, the combination of technology, product range, transparency, liquidity, and efficiency makes NSE the preferred stock exchange in India.