What are BSE and NSE?

What is BSE or Bombay Stock Exchange?

BSE are the initials of the BOMBAY STOCK EXCHANGE.  This is the oldest stock exchange in Asia, having been founded by Premchand Roychand in 1875.  Stocks and shares had been traded in this open outcry market for over a century before it was revolutionised in 1995 when it was converted to an electronic trading system.  Today there are almost 6000 companies listed on the BSE, and it has become one of the largest exchanges in the world.  Out of these companies only about 2000 of them are regularly traded.

Securities that can be traded on the BSE include stocks, stock options, stock futures, index options, index futures, and weekly options.  The Sensex is an index that measures the overall performance of the BSE, and it includes stocks from 12 different sectors across 30 component companies.

What is NSE or National Stock Exchange?

NSE are the initials of the NATIONAL STOCK EXCHANGE of INDIA. This is the other main stock exchange in India.  This one is much younger than its BSE counterpart, and was already an electronic trading system at the time of its inception in 1992.  It differs from the BSE in that it only has around 1600 companies listed in it.  However it should be noted that some companies feature in both exchanges.  Although the BSE clearly has a lot more companies listed, many of them are barely traded if at all.  The NSE is much bigger than the BSE in terms of volume of shares traded and the value of turnover that goes on.  The index that measures overall performance of the NSE is called the Nifty 50 (because it includes stocks from 50 companies in various sectors).

Which One is Better?

In most situations, you would hear people say that NSE is better as it is more active, and has a higher turnover of shares and value.  It is really up to the individual trader to decide which one suits him the best.  As it has been mentioned that many companies are listed in both exchanges, it is possible to buy shares in one, and sell in the other.  The prices do not move in unison.  This means that it may be possible to buy a company share for say Rs.907 and sell it on the other exchange for Rs.909. Sometimes there are opportunities to make profit from this.

Not all brokers are able to offer you trades on both exchanges.  Some will only be able to facilitate trading on one or the other.  Check carefully before deciding which broker to use to ensure they can provide the service you require.

How to invest in BSE and NSE?

Anybody wishing to engage in stock market trading in India, whether it be on the BSE or NSE will need to have a Demat Account.  This is a special type of account used for holding securities in electronic form.  This has many benefits, not least because it removes the need for any paperwork to be issued and looked after by the trader or the broker.  Most of the best online stock trading brokers in India 2020 are able to open Demat accounts on behalf of their customers.  Some even offer to do it without any cost whatsoever.  Demat accounts are used in conjunction with a trading account.  As demat accounts can only hold securities and not cash, any time you sell a security and need a payout of the cash, this will be done through the corresponding trading account.  Some brokers will charge a monthly maintenance fee for keeping the demat account open, while some will not charge at all.  Please make sure to check these details before deciding which broker you want to begin trading with.

If you have any further questions related to NSE, BSE, Demat accounts or stock market trading in India, you can always expect expert advice from GOOD WILL INDIA.  Their advisors are waiting to speak to you on +9180122 78000.  Don’t be shy.  Everybody needs help to get started in every field of life, and it is better to ask and learn rather than find out through making mistakes whenever money is at risk.




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