Basics of Stock Market - Beginner

Difference between NSE and BSE – What are nse/bse?

A complete knowledge of all stakeholders is essential for any trader or investor in the share market. Investors/traders, stock broker, clearing corporation, and exchanges are the major players. The broker acts as an intermediary between the exchange and you. The exchanges list companies that issue shares to the public to raise capital. IPO is where shares are given to investors in the primary markets. Once the IPO process is completed, the company becomes listed on an exchange that allows shares to be traded. You can purchase shares of Infosys and Royal Enfield by trading on the exchange at any time. IPOs last only 3 days. The secondary market is the only way to trade shares after that time. This is where all shares are traded. The stock markets are regulated and managed by SEBI. Before entering the stock market, it is important for investors and traders to know what nse is and how it differs from bse.

India's major exchanges are NSE and BSE. Trade in stocks can be done by opening a trading or demat account with a stockbroker or participant depository.

Why are companies listed on stock exchanges?

  • 1. Transparency in automated trading

    High-end technology in trading offers investors seamless experiences. Investors are less likely to experience high volumes of trading on the exchanges. Automating transactions increases investor confidence and transparency.

  • 2. Huge Reach:

    You can access online trading platforms from anywhere in the country. The exchange listing gives the company more visibility and allows the public to access the platform for investment purposes.

  • 3. Transaction speed is high

    Before the advent of online trading, trade executions were slow and often delayed. This has all been eliminated by high-speed trading platforms. The exchange allows transactions to be completed at lightning speed, which has made them more efficient.

Exchanges play a role:

  • 1. Where securities can be traded:

    Any investor can purchase or sell securities according to his needs. There is no time limit for trading shares. High liquidity is not possible with other investment options like gold or land.

  • 2. Responsible for evaluating stock prices

    The price of stock can increase or decrease depending on the demand and supply. If the company is doing well, there will be more demand for its stock and a consequent increase in its price. If the company fails to perform well, there is a decrease in demand for its shares and a decrease in its price. The exchange determines the stock's value.

  • 3. Investor protection:

    The exchange has strict controls over the types of companies that are listed. Investors' money is also protected because there are many regulations and norms these companies must follow.

  • 4. Serves as a barometer for a country’s economy

    The country's economic health is determined by the state of its stock market. A strong government usually results in better performance for the markets, and vice versa.

  • 5. Investing options that are more diverse:

    An investor or trader may invest according to their financial goals and risk appetite. Wealth creation is possible with a wide variety of financial products.

Let's first learn about NSE and the benchmark index.

What is nse?

The National Stock Exchange (NSE), which was established in 1992, is located in Mumbai. The NSE was the first to introduce electronic trading platforms.

Nifty50 is an abbreviation for National Stock Exchange 50. It is the benchmark NSE index that includes 50 stocks.

Now let's move on to BSE meanings and benchmark indexes.

What is bse?

BSE (Bombay Stock Exchange), was established in 1875. It is Asia's oldest stock exchange.

Sensex, the benchmark index of BSE, is derived by the words index and sensitive. Sensex consists of 30 stocks.

Nifty and Sensex are the faces of Indian stock markets. They fluctuate based on economic and political factors.

Trades on NSE or BSE should be made

Although the number of companies that are listed on BSE is greater than NSE's, NSE has the largest trading volume. It is easier to find the price of a stock because large volumes are traded on NSE. Stock prices vary in NSE and BSE. Before you decide to purchase a stock, make sure you compare their prices and then decide. Keep in mind, however, that only a few shares can be traded on BSE.

What is interoperability?

SEBI, the market watchdog, recently introduced interoperability. First, you need to understand what a clearing company is. This clearing corporation is responsible for settlement and delivery of transactions. Trade executed on NSE cannot be settled by NSE Clearing. However, trades on BSE can only be settled via ICCL. Interoperability permits stock brokers to use any clearing corporation for trade settlement regardless of where they were executed. This move benefits all stakeholders as it lowers the compliance cost of stockbrokers, which in turn will reduce the investment burden for investors.

There are other stock exchanges in India

  • Calcutta Stock Exchange Ltd
  • India International Exchange (India INX).
  • Metropolitan Stock Exchange of India Ltd
  • NSE IFSC Ltd

Difference between nse & bse

Incorporated in19921875
Benchmark IndexNiftySensex
Index of Total Companies5030
Also known asThe largest stock exchangeThe oldest stock exchange
Numerous listed companies5 000+1600+
MD & CEOMr. Ashish Kumar ChauhanMr. Vikram Limaye
Trading volumeHigherNSE is lower than NSE

When you understand the differences between nse & bse, you will find it easier to invest in the sharemarket. You can then choose where you want shares to be bought or sold.

What is the difference between FPO & IPO?

What is a preference share?

Stock Quotes and their meaning

How to read stock charts from a beginner's perspective?

What is a stock-market crash?

How can you invest with very little money in the stock market?

What is pre-open market trading?

12 Factors that Influence Gold Prices

What is Hedging in Stock Market?

How to open a Demat account online - Step by step procedure to open Demat

Face Value of Share – What is the face price in the share market?

What is the difference between bonds and stocks?

What is Stop Loss in share Trading?

Capital Market and Its Types

Stock Market Index

What is Sustainable growth?

ROE and ROCE – What is the Difference between ROE & ROCE?

Stock Market Timings: Know the Stock Market Closing & Opening Time in India

Inflation and investment

ROCE- Meanings, Importance, & ROCE Formula