Differences between BSE vs NSE
A stock exchange/market is a platform for the trading of securities like shares (Stock), and derivatives. A stock may be bought or sold only if it is 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 ) which are regulated by the Security and Exchange Board of India (SEBI).
In stock exchanges, ( BSE vs NSE ) continuous trading of securities takes place and trade occurs at different prices. On a trading day, four prices can be easily identified, namely opening price, closing price, the highest price of the day, and the lowest price of the day. The value of the section of stock is determined through stock market indices and Stock market indices are the barometer of the stock market. BSE SENSEX, NSE, etc. BSE vs NSE earns its income via “Transaction Charges”, which are charged separately by every broker.
Bombay Stock Exchange (BSE)
The Bombay Stock Exchange (BSE) is an Indian Stock Exchange located at Dalal Street, Mumbai. It was established in the year 1875 and is considered the oldest stock exchange in Asia. BSE is the first stock exchange in the country recognized by the Indian Government under the Securities Contracts Regulation Act (SCRA), 1956. 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 ranks 10th position 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 of 5629 as of March 2018. The S&P BSE SENSEX, published on 1 January 1986, is the benchmark index of the Bombay Stock Exchange. It is the first equity index in India which comprises 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 transactions per day. 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
Initially, in the year 1986, SENSEX was calculated using the total market capitalization method. Post-2003, SENSEX calculation methodology has been changed to free float market capitalization. Since 2003, SENSEX was calculated using the free float market capitalization of 30 major BSE listed companies of different sectors along with the base value of 100 (1978-79). SENSEX is calculated 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, BSE index (SENSEX) consists of only two stocks ‘A’ and ‘B’ Company. ‘A’ has 100 outstanding shares out of which only 50 are available for calculation of 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 20 shares are held by promoters and the remaining 30 are free to float shares (open market shares). Market Calculation of Free Float market price of a share is Rs.5 per share.
Solution:
Sum of free float market cap of company ‘A’ and company ‘B’ is 500 +150 = Rs. 650
Assume 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 is located in, Mumbai and is popularly known as “NSE”. It was established in the year 1992 and is considered India’s Biggest Exchange by turnover. The NSE launched its benchmark Index, the NIFTY with 50 stocks from leading companies in 1996 and kept adding 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 lakhs trading terminals.
In NSE, the trading member is admitted to any of the following combinations of market segments: Wholesale Debt Market segment, Capital Market (CM) and the Futures and Options segments, CM Segment and the WDM (Wholesale Debt Market) segment, or CM (Cash Market) Segment, the WDM and the F and O segment.
NSE is ranked 11th position globally with an overall market capitalization of more than $2.27 trillion as of April 2018. It is one of the largest exchanges in the world by the listed companies of 1600+ as of March 2018.
Calculation of NIFTY
The same method is used to calculate NSE indices NIFTY as BSE indices SENSEX but it includes two major changes:
- Base year: 1995 and
- Base value (index value): 1000.
Nifty represents stocks of NSE listed 50 major companies of 23 sectors of the economy.
| Formula for calculation of NIFTY = (Sum of free flow market cap of 50 major stocks of NSE) X Index value in 1995 / Market Cap value in 1995. |
BSE vs NSE Infographics
Below are the top 7 differences between BSE vs NSE.
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Key differences between BSE vs NSE
Both BSE vs NSE are popular choices in the market; let us discuss some of the major differences:
- BSE or Bombay Stock Exchange is the oldest stock exchange in Asia and was established in 1875 whereas NSE or National Stock Exchange had been incorporated in 1992. NSE was the first stock exchange in the country which provides a modern, fully automated electronic trading system (screen-based).
- Sensex is the benchmark index of BSE of top 30 companies whereas Nifty or Nifty 50 is the benchmark index of NSE of top 50 companies.
- In BSE, more than 5600 companies are listed whereas, listed companies of NSE are more than 1600.
- As on 31st March 2018, the Total market capitalization of BSE is approx. US$ 2.3 whereas the total market capitalization of NSE is approx. US$ 2.27 trillion.
- NSE is having an established Derivatives Market whereas BSE is very new to the Directives Market.
- Electronic exchange system was first introduced by NSE in 1992 whereas the electronic system, BOLT, came into existence in NSE in the year 1995.
- BSE is the 10th largest stock exchange in the world whereas NSE ranks 11th in the world.
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 plays an important role in the growth of the Capital Market. Millions of investors and brokers transact daily basis through both exchanges. These stock exchanges are based in Mumbai, India as well as recognized and regulated by the securities and exchange board of India (SEBI). 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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