Updated November 15, 2023
Differences Between BSE vs NSE
A stock exchange/market is a platform for trading securities like shares (Stock) and derivatives. A stock may be purchased or sold only if listed on an exchange. Hence, it is a meeting place for the stock buyer and seller. The price of the stock is determined through the supply-demand mechanism. The major stock exchanges in India are the Bombay Stock Exchange and the National Stock Exchange ( BSE vs NSE ), regulated by the Security and Exchange Board of India (SEBI). In stock exchanges ( BSE vs. NSE ), securities are traded continuously, and trade occurs at different prices.
On a trading day, one can easily identify four costs: the opening price, the closing price, the highest price of the day, and the lowest price of the day. The value of a section of stock is determined by stock market indices, which serve as the barometer of the stock market. BSE SENSEX, NSE, etc. BSE vs. NSE generates its income through “Transaction Charges” that are separately imposed by each broker.
Bombay Stock Exchange (BSE)
The Bombay Stock Exchange (BSE) is an Indian Stock Exchange located at Dalal Street, Mumbai. It was established in 1875 and is considered the oldest stock exchange in Asia. Over the past 143 years, BSE has facilitated the growth of the corporate sector by providing time and cost-efficient access to capital market resources. BSE is the first stock exchange in the country recognized by the Indian Government under the Securities Contracts Regulation Act (SCRA), 1956.
BSE ranks 10th globally with an overall market capitalization of more than $2.3 trillion as of April 2018. It is the largest exchange in the world in terms of the number of listed companies, 5629 as of March 2018. The S&P BSE SENSEX, published on 1st January 1986, is the Bombay Stock Exchange benchmark index. It is India’s first equity index comprising 30 companies spread across all sectors and acts as a barometer for measuring market performance.
In 1995, BSE online trading (BOLT) was established, and at that time, its capacity amounted to 8 million daily transactions. BSE is the first stock exchange in Asia, and it offers varied services such as market data services, risk management, CDSL (Central Depository Services Limited), depository services, etc.
Calculation of SENSEX
In 1986, SENSEX was calculated using the total market capitalization method. Post-2003, the SENSEX calculation methodology changed to free float market capitalization. Since 2003, the calculation of SENSEX has been performed by utilizing the free float market capitalization of 30 major companies listed on the BSE, representing different sectors, with a base value of 100 (1978-79). The SENSEX is recalculated every 15 seconds.
| The formula for calculation of SENSEX = (Sum of free float market cap of 30 major companies of BSE) * Index value in 1978-79 / Market Cap value in 1978-79. |
Example:
Suppose the BSE index (SENSEX) consists of only two stocks, ‘A’ and ‘B’ Companies. ‘A’ has 100 outstanding shares, of which only 50 are available for calculating Market Capitalization trading in the open market. The market price of a share is Rs.10 per share.
Company ‘B’ has 50 outstanding shares, out of which promoters hold 20, and the remaining 30 are free-to-float shares (open market shares). The market Calculation of a claim’s Free Float market price is Rs.5 per share.
Solution:
The sum of the free float market cap of company ‘A’ and company ‘B’ is 500 +150 = Rs. 650
Assume the market cap during 1978-79 is 50.
Now SENSEX will be = (Sum of free float market cap of 30 major companies of BSE) * Index value in 1978-79 / Market cap value in 1978-79.
Or, (650*100)/50= 1300
Calculation of Market Capitalization
| Stock | Issued Stocks | Market price (Rs.) | Market Cap (Rs.) |
| X | 100 | 10 | 1000 |
| Y | 50 | 5 | 250 |
Calculation Free Floats Market Capitalization
| Stock | Issued Stocks | Market price (Rs.) | Market Cap (Rs.) |
| X | 50 | 10 | 500 |
| Y | 30 | 5 | 150 |
National Stock Exchange (NSE)
The National Stock Exchange of India Limited, also known as “NSE,” established in 1992, is located in Mumbai and holds the distinction of being India’s biggest exchange by turnover. The NSE launched its benchmark Index, the NIFTY, with 50 stocks from leading companies in 1996 and added further indices based on sector & market capitalization. It was promoted by leading financial institutions (Banks & LIC) at the request of the Government of India. NSE provides a modern, screen-based trading system with over two lakh terminals.
The NSE admits a trading member to any of the following combinations of market segments: the Wholesale Debt Market segment, the Capital Market (CM) and the Futures and Options segments, the CM Segment and the WDM (Wholesale Debt Market) segment, or the CM (Cash Market) Segment, the WDM, and the F and O segment.
NSE is ranked 11th globally, with an overall market capitalization of more than $2.27 trillion as of April 2018. It is one of the largest exchanges in the world by the listed companies of 1600+ as of March 2018.
Calculation of NIFTY
The same method is used to calculate NSE indices NIFTY as BSE indices SENSEX, but it includes two major changes:
- Base year: 1995 and
- Base value (index value): 1000.
Nifty represents stocks of NSE Listed 50 major companies in 23 sectors of the economy.
| The formula for calculating NIFTY = (Sum of free flow market cap of 50 major stocks of NSE) X Index value in 1995 / Market Cap value in 1995. |
BSE vs NSE Infographics
Below are the top 7 differences between BSE vs NSE.
Key Differences Between BSE vs NSE
Both BSE vs NSE are popular choices in the market; let us discuss some of the major differences:
- BSE, or Bombay Stock Exchange, is the oldest stock exchange in Asia and was established in 1875, whereas NSE, or National Stock Exchange, was incorporated in 1992. NSE was the first stock exchange in the country that provided a modern, fully automated electronic trading system (screen-based).
- Sensex is the benchmark index of BSE of the top 30 companies, whereas Nifty or Nifty 50 is the benchmark index of NSE of the top 50 companies.
- In BSE, more than 5600 companies are listed, whereas listed companies of NSE are more than 1600.
- As of 31st March 2018, the Total market capitalization of BSE is approx. US$ 2.3, whereas the total market capitalization of NSE is approx. US$ 2.27 trillion.
- NSE has an established Derivatives Market, whereas BSE is new to the Directives Market.
- The electronic exchange system was first introduced by the NSE in 1992, whereas the electronic system, BOLT, came into existence in the NSE in 1995.
- BSE is the 10th largest stock exchange in the world, whereas NSE ranks 11th.
BSE vs NSE Compariosn Table
Below is the topmost comparison between BSE Vs NSE
| Basis of comparison |
Bombay Stock Exchange |
National Stock Exchange |
| Established in | 1875 | 1992 |
| Geographical spread | Presence in more than 417 cities. | Presence in more than 2000 cities. |
| Claim to fame | Oldest stock exchange in Asia. | Largest stock exchange in India in terms of daily turnover and number of trades. |
| Main Index | BSE Sensex | Nifty |
| Benchmark Index | Top 30 Companies | Top 50 Companies |
| Market capitalization | US$ 2.3 trillion as of March 2018. | US$ 2.27 trillion as of March 2018 |
| Ranking w.r.t. market capitalization | 10th largest in the world. | 11th largest in the world. |
Conclusion
BSE vs. NSE together play an important role in the growth of the Capital Market. Millions of investors and brokers transact daily basis through both exchanges. The Securities and Exchange Board of India (SEBI) recognizes and regulates the stock exchanges based in Mumbai, India. Top trading companies of both BSE vs NSE exchanges include TCS, SBI, ITC, ONGC, HDFC Bank, SunPharma, Reliance Industries Limited, Coal India, ITC Limited, etc.
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