If you want to become an investor, you will be familiar with stock markets and exchanges. A stock exchange is similar to a market, where people trade and purchase securities with the help of stockbroking companies or brokers. As one of the quickest-growing economies, India has two reputable stock exchanges—the NSE and the BSE. They are crucial platforms for firms to raise capital, investors to sell securities and the whole functioning of the capital market in India. Although they appear within the Indian capital market and are similar, they differ in various aspects. Read the article to familiarise yourself with the difference between NSE and BSE.

What is NSE?

The National Stock Exchange, often abbreviated as NSE, is the largest stock exchange in India based on market capitalisation. NSE was integrated in 1992 and recognised as a stock exchange in 1993 under the 1956 Securities Contracts Regulation Act. NSE caters to diverse services, including trading, clearing, equity settlements, derivatives, etc. It introduced the electronic method of stock trading. Headquartered in Mumbai, the National Stock Exchange utilises the NIFTY 50 index, which comprises the share market’s top 50 stocks across multiple stocks.

What is BSE?

The Bombay Stock Exchange, abbreviated as BSE, is the oldest stock exchange in India, founded in 1875. BSE earned permanent prominence under the 1956 Securities Contract Regulation Act Provision. It offers a clear systematic mechanism to trade in equity, currencies, debt instruments, derivatives, and mutual funds. The other facilities of the Bombay Stock Exchange are clearing, settlement, managing risk, services related to market data, and education. BSE is Asia’s first and one of the world’s leading stock exchanges. It launched the S&P BSE Sensex, which comprises the stocks of the top 30 firms.

BSE Vs NSE: Key Differences

Evaluating the major difference between NSE and BSE is crucial as it will give you a clear idea regarding these stock exchanges. Mentioned below are the key differences between the two:-

Overview

NSE stands for National Stock Exchange which is the largest stock exchange in India whereas BSE or Bombay Stock Exchange is the oldest stock exchange in India

Ownership and Governance

The Bombay Stock Exchange functions as a corporate body. Its ownership is distributed among several stakeholders, such as brokers, financial establishments, etc. A board of directors governs it, and professional executives manage it.

On the other hand, the National Stock Exchange is a corporate body like the BSE, but it follows a different approach to ownership and governance. It functions as a public limited company with a comprehensive shareholding structure. Its shareholders are various financial establishments, such as banking institutions, insurance companies, and foreign investors.

Index

Both these stock exchanges have their benchmark indices. The Bombay Stock Exchange’s primary index is the Sensex, which consists of 30 stocks traded actively across multiple sectors. The Sensex is broadly considered as the Indian stock market’s barometer.

On the other hand, the primary index of the National Stock Exchange is the NIFTY, which is the benchmark for assessing the equity market’s performance in India.

Market Capitalisation

Market capitalisation is the overall value of an organisation’s outstanding shares. When differentiating the market capitalisation between these stock exchanges, the National Stock Exchange holds a higher market capitalisation than the Bombay Stock Exchange is evident.

As of March 2023, the NSE had a market capitalisation of approximately $3.2 trillion, placing it on the list of the third largest stock exchanges worldwide. On the other hand, the capitalisation of the Bombay Stock Exchange stood at around $2.6 trillion as of March 2023.

Trade Volume and Equity

The National Stock Exchange has consistently maintained higher trading volumes and liquidity than the Bombay Stock Exchange. This is attributed to digital trading systems, investor participation, and the prominence of Nifty 50, the NSE’s benchmark index.

In the Indian capital market, the National Stock Exchange has shown a higher trade volume than the Bombay Stock Exchange. The National Stock Exchange's high trading volumes and liquidity make it more attractive to traders and investors than the BSE.

Trade Time

The trade timings for both stock exchanges begin at 9:15 am to 3:30 pm. Nevertheless, there are some differences between the two regarding their pre-open sessions. The Bombay Stock Exchange conducts a 15-minute pre-open session. It starts from 9 am to 9:15 am. The pre-open session lets traders place orders before the market officially opens to traders, letting them prepare and plan their strategies. The pre-open session of the National Stock Exchange is similar to BSE. However, the only difference is that the NSE session is categorised into order entry, order matching, and buffer tenure.

During the order entry phase, traders can input their purchase or trade orders into the system. After this, the order-matching phase begins, in which the system matches the orders depending on the predetermined matching criteria. Lastly, the buffer time ensures a seamless shift from the pre-open to the daily trading session.

NSE vs BSE – Which Better?

Ascertaining which stock exchange is more suitable to you depends on several attributes and personal preferences. It is important to note that both have unique privileges and considerations, such as benchmark indices, trading indices, and market capitalisation. It also depends on your investment goals and trading style. Analysing the factors above, seeking assistance from financial advisors, and conducting thorough research to make a sound decision that syncs with your investment strategies are advisable.

Final Thoughts!

Even though BSE is the oldest stock exchange in India, NSE was the first to introduce an automatic electronic screen-based trading system in the country. SEBI recognises BSE and NSE, and the corporate offices are in Mumbai. They have a nationwide prominence and cater to everyone worldwide. NSE vs BSE is vital to offer traders an efficient, formalised and transparent technique for trading in diverse financial securities. The process has been designed to offer quality services, protect market ethics, and drive India's capital market development. Read the differences between BSE vs NSE before choosing one. Understand how these platforms operate and then trade. Both go through market volatility. Hence, a healthy risk appetite is recommended if you trade with them.

Source –
https://groww.in/blog/difference-bse-nse
https://www.bajajfinserv.in/difference-between-nse-and-bse

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