When it comes to stock market exchanges in India, two names stand out—the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Both of these are recognized major exchanges where most of the trading of listed securities and bonds occurs in India. But therein lies a lot of queries, about why there are two such exchanges in India, what is BSE, what is NSE and what are the major differences between NSE and BSE. We here take a look at both of these major exchanges of India and explain the differences between BSE and NSE.
What is a Stock Exchange?
A stock exchange, also known as a stock market or equity market, is a platform where investors can buy and sell shares of publicly listed companies. These exchanges act as intermediaries between buyers and sellers, allowing transactions to take place in a transparent and regulated manner. Stock exchanges play a crucial role in the functioning of financial markets, providing liquidity and facilitating the raising of capital for companies. Some of the world’s largest stock exchanges include the New York Stock Exchange (NYSE), the NASDAQ Global Market, and the London Stock Exchange (LSE) while in India, National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the largest major stock exchanges.
What is the National Stock Exchange(NSE)?
NSE stands for National Stock Exchange of India, which is a stock exchange based in Mumbai, India. Established in 1992, it is one of the largest stock exchanges in the world with over 2100 listed companies. NSE is ranked 9th largest in the list of top stock exchanges of the world with a market capitalization of $3.27 Trillion and is the world’s largest derivatives exchange by number of contracts traded.
The NSE’s primary index, the NIFTY 50, consisting of 50 stocks, serves as a widely utilized gauge for investors both in India and globally to assess the dynamics of the Indian capital market. Launched in 1996 by the NSE, the NIFTY 50 index plays a pivotal role in financial evaluations.
What is the Bombay Stock Exchange(BSE)?
The Bombay Stock Exchange (BSE) is a stock exchange located in Mumbai, India. It is one of the largest stock exchanges in the world, with a market capitalization of over $3.8 trillion. The BSE was founded on January 30, 1857, and is the oldest stock exchange in Asia. It operates as a trading platform for various securities, including shares, bonds, and derivatives, and is listed in the Forbes Global 2000 list of the world’s largest companies.
What are the differences between NSE and BSE?
Here is a comparison table with differences between NSE and BSE:
|Basis for Comparison
|National Stock Exchange
|Bombay Stock Exchange
|Date of Establishment
|No of companies in the index
|No of companies listed on the exchange
|Products on offer
Security Lending & Borrowing Scheme
Institutional Placement Program
Offer for Sale
Offer for Sale
|Use of Electronic Trading
Can NRIs invest in the Equity Market in India?
NRI investors who are ready to take some risk in the stock market can consider investing in equity. Non-resident Indians can directly invest in the stock market in India under the Portfolio Investment Scheme (PIS) of the RBI.
NRIs need to have the following accounts for equity investments:
- Non-Resident External (NRE) Account
- Non-Resident Ordinary (NRO) Account
- NRI Demat Account
- NRI Trading Account with a registered broker
Dividend income and the capital gains earned by NRIs from shares and equity-oriented schemes of mutual funds are taxed in India. Find the capital gains tax on shares purchased by NRIs.
Can NRIs invest in Mutual Funds in India?
- Investment can be made through a Non-Resident External account or a Non-Resident Ordinary account
- Investment is possible in Indian National Currency (INR) only and not in a foreign currency
Both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) contribute significantly to the Indian financial landscape. While BSE carries a rich legacy and is home to the iconic Sensex, NSE has emerged as a dynamic and technologically advanced exchange. Understanding the distinctions between the two is crucial for investors navigating the complexities of the Indian stock market. Whether you’re an experienced trader or a novice investor, being informed about NSE and BSE can empower you to make well-informed financial decisions.
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What are the major stock exchanges of India?
- National Stock Exchange(NSE) and Bombay Stock Exchange(BSE) are the two major stock exchanges of India.
What is the market capitalization of the Bombay Stock Exchange(BSE)?
- Bombay Stock Exchange(BSE) has a market capitalization of $3.80 Trillion and is the 8th largest stock exchange in the world by market capitalization.
What is the market capitalization of the National Stock Exchange (NSE)?
- National Stock Exchange(NSE) has a market capitalization of $3.27 Trillion and is the 9th largest stock exchange in the world by market capitalization.
What is the benchmark index of Bombay Stock Exchange (BSE)?
- The benchmark index of Bombay Stock Exchange (BSE) is S&P BSE Sensex which has 30 includes top 30 fundamentally strong and blue-chip stocks.
What is the benchmark index of National Stock Exchange (NSE)?
- The benchmark index of National Stock Exchange (NSE) is Nifty50 which includes top 50 fundamentally strong and blue-chip stocks.
Which is better, NSE or BSE?
- The discussion on which one of the NSE or BSE is better has a never-ending answer. It depends on the type of user and their preference for the platform which showcases which one suits them the best. NSE is the world’s largest derivatives exchange by the number of contracts traded while BSE is the fastest stock exchange in the world with a speed of just 6 microseconds.
What is the timing of BSE and NSE?
- The timing of both BSE and NSE for equities trading is the same, i.e. from 9:15 am to 3:30 pm.
Can a company be listed in both BSE and NSE?
- Yes, a company can be listed on both the stock exchanges, i.e. BSE and NSE. Most of the blue chip companies are listed in both NSE and BSE.
Which is better NSE or BSE?
- As per the market capitalisation and the no of companies listed in the stock exchange, BSE has an upperhand in the market while NSE is regarded as a more modern day version with advanced technology and additional products like derivatives. In fact, NSE is the world’s largest derivatives exchange by the number of contracts traded.
Who owns NSE?
- National Stock Exchange(NSE) is owned by various financial institutions like banks and insurance companies.
Who owns BSE?
- When it comes to ownership of Bombay Stock Exchange(BSE), around 40% is owned by brokers while the remaining is owned by outside investors and domestic financial institutions.
What is the full form of NIFTY?
- NIFTY is the benchmark index of National Stock Exchange (NSE). NIFTY full form is National Stock Exchange Fifty and is known as NIFTY50. It includes the top 50 fundamentally strong and blue-chip stocks.
What is the full form of Sensex?
- The full form of Sensex is Stock Exchange Sensitive Index and is the benchmark index of Bombay Stock Exchange. It includes the top 30 fundamentally strong and blue-chip stocks listed on the BSE.
Can NRI invest in the Indian stock market?
- Yes. NRIs can invest in the Indian Stock Market by buying stocks listed on the National Stock Exchange of India Ltd. (NSE). To be eligible to invest in stocks, NRIs need to have a PIS Account under the Portfolio Investment Scheme* (PIS) that will allow them to trade stocks. *(Portfolio Investment Scheme (PIS): Through this scheme of the Reserve Bank of India, NRIs can purchase and sell shares and debentures of Indian companies on a recognized stock exchange)
How can NRIs invest in India?
- Here are the steps an NRI can follow to invest in India:
1. Open an NRE or NRO (Non-Resident Ordinary) bank account: NRIs need to open an NRE or NRO bank account with an Indian bank to invest in India. An NRE account is used for investing foreign earnings that can be repatriated, while an NRO account is used for investments made from earnings in India that cannot be repatriated.
2. Obtain a Permanent Account Number (PAN): NRIs need to obtain a PAN card to invest in India. This card is required for opening a bank account, investing in the stock market, and purchasing property in India.
3. Complete KYC norms: NRIs need to complete the KYC (Know Your Customer) norms by submitting the necessary documentation such as a copy of their passport, address proof, and PAN card.
4. Choose an investment option: NRIs can choose to invest in various options such as stocks, bonds, mutual funds, real estate, and more. NRIs can also invest in the Indian stock market through the Portfolio Investment Scheme (PIS).
5. Ensure compliance with regulations: NRIs need to ensure compliance with all applicable regulations and laws when investing in India.
However, it’s recommended that NRIs consult with a professional financial advisor or tax consultant to ensure compliance.