In India, NSE & BSE Stock Exchanges are works for the trading of stocks by investors with the help of Brokerages.
The two leading stock exchanges in India are
- National Stock Exchange (NSE)
- Bombay Stock Exchange (BSE)
Both NSE & BSE are recognized by the government of India and work under the supervision of SEBI.
What is NSE & BSE? What are the benefits of using NSE & BSE ?? are explained below
Table of Contents
What is NSE?
NSE is Stock Exchange located in Mumbai, Maharashtra. It was founded in 1992 and the key people in National Stock Exchange are Girish Chandra Chaturvedi as Chairperson and Vikram limaye as MD&CEO. NSE works under the supervision of SEBI.
National Stock Exchange was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system that offered easy trading facilities to investors. The benchmark index of NSE is Nifty. An index is important to measure the performance of investments against a relative market index.NSE allows international investments. National Stock Exchange offers trading, clearing, and settlement services in equity, equity derivative, debt, commodity derivatives and currency derivatives segments. NSDL (National Securities Depository Limited ) works for the National Stock Exchange.
National Securities Depository Limited is created to hold securities such as bonds, shares etc. Simply NSDL allows traders and investors to open Demat accounts so their shares and securities can be held electronically through the Demat accounts.
Benefits of NSE
- National Stock Exchange performs on the “National exchange automated trading system” which makes huge transparency.
- Transparency makes trust in NSE from the investors.
- NSE introduced derivatives such as Future & Options in India.
- The National Stock Exchange has higher liquidity and volume.
- NSE allows investors to sell and buy shares at their desired prices.
What is BSE?
BSE is a Stock Exchange. It was the oldest Exchange in Asia located in Bombay, Maharashtra. It was founded by Premchand Roychand in 1857. The Key people in BSE are Vikramajit Sen as Chairman and Ashish Chouhan as MD CEO. Bombay Stock Exchange works under the supervision of SEBI. There are around 6000 companies under BSE. The Benchmark Index of BSE was Sensex. In BSE Securities such as Equity, Derivatives, futures, and options are traded.
The Index Sensex shows the performance of the top 30 companies. Any Stock Exchange must use the Index since any Investor Cannot examine all 6000 companies’ performance. Hence using these indices Investors can Understand the performance of the Market. CDSL is the Depository for BSE. Central Depository Services ( India ) Limited is a type of Depository. National Securities Depository Limited is the Depository for National Stock Exchange and Central Depository Services Limited is the Depository for the Bombay Stock Exchange. The working Principle of both Depositories is the same, that is Both acts as an intermediary between investors and companies. The only difference between both Depositories is their operating Markets i.e one is for NSE another is for BSE.
Benefits of BSE
A company listed on Bombay Stock Exchange has several benefits such as
- Hassle-free capital generation.
- Legal supervision.
- Enough pricing rules.
- Punctual information display.
- Secured Guarantee.
An Investor who trades on BSE has the following benefits
- BSE on a Daily basis displays the data in the form of price quotations and others.
- BSE provides valuable Information to the public which can be used for Research.
- The stock Exchange prices can be an index of the state of the Economy.
By examing the information provided by the BSE. An Investor can do better with their shares.
Difference between BSE and NSE
Here shows the top 10 differences between NSE and BSE
- Bombay Stock Exchange is the oldest stock exchange while National Stock Exchange is the youngest and biggest stock exchange in terms of liquidity.
- Bombay Stock Exchange was founded in 1875 whereas National Stock Exchange was founded in 1992.
- The Benchmark Index of BSE is Sensex and for NSE benchmark Index is Nifty.
- Around 6000 companies are listed under BSE while around 1500 companies are listed under NSE.
- Bombay Stock Exchange has lower liquidity while the National Stock Exchange has higher liquidity.
- Volumes traded in NSE are much higher compared to BSE.
- The global rank of the Bombay Stock Exchange is 10 while National Stock Exchange is 11.
- In BSE securities such as Equity, Derivative, Future, and Options are traded.
- In NSE securities such as equity, equity derivative, debt, commodity derivatives, and currency derivatives segments are traded.
10. Bombay Stock Exchange organizes everything on its website www.bseindia.com while National Stock Exchange uses www.nseindia.com.
Which is better NSE or BSE?
Both National Stock Exchange and Bombay Stock Exchange are suitable for investors. But which is better was depends on the type of investor, Mainly two types of investors are examined
1. Whether the investor is a beginner or an expert?
2. Whether does the investor trade as an Intra-Day trader or a Seasonal Trader?
If the investor is a beginner and wants to trade on Intraday Basis, NSE will be suitable since it has higher volume and liquidity.
If the investors are seasoned investors, BSE will be suitable since investors do not have to worry a lot about volume and liquidity.
Why is NSE preferred over BSE?
National Stock Exchange was more preferred than the Bombay Stock Exchange since NSE gives services on derivatives such as Futures & Options in India. National Stock Exchange was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system that offered easy trading facilities to investors.
Also, Volumes and liquidity traded in NSE are much higher compared to BSE.
What difference between NSE and BSE share prices?
There is quite a difference in share prices between the National Stock Exchange and the Bombay Stock Exchange. The difference is in a few paise only which depends on the liquidity.
For example If ABC stock is trading at ₹ 20 on NSE, it may be trading at ₹ 19.5 on BSE depending on how liquid the stock is. If the stock is illiquid the price difference will be high.
In which exchange should investors transact?
Both National Stock Exchange and Bombay Stock Exchange are suitable for investors. But which was better depends on the behavior of the investor. In which exchange should investors transact was purely investors personal choice.
But If the investor is a beginner and has the behavior to trade on Intraday Basis, NSE will be suitable since it has higher volume and liquidity. and If the investors are seasoned investors, BSE will be suitable since investors do not have to worry a lot about volume and liquidity.
Conclusion
Both NSE & BSE are recognized by the government of India and work under the supervision of SEBI. The National Stock Exchange has higher liquidity and volume. Bombay Stock Exchange also has many benefits. Both NSE & BSE have their own benefits. Choosing a stock exchange purely depends on the choice of investors.