What are BSE and NSE? How do they work?

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Open the financial section of a newspaper and you are bound to notice one of these terms – stock exchange, Dalal Street, bulls or bears. However, many times these terms can seem overwhelming and even terrifying for beginners or the uninitiated. If you have been wondering what are these terms or can they be a part of your life, continue reading.

First, let us start with the basics. 

What is the stock market? It is a secondary market wherein stock trading takes place. Post an Initial Public Offer (which takes place in the primary market), companies can list their shares on the stock market for subsequent trading. 

What is a stock exchange? A stock exchange is the leading hero of a stock market. In simple words, it is an organized platform or market, where investors (or traders) know the best stocks to buy/sell stocks (or other financial instruments) of different companies. There are two major stock exchanges in India – NSE and BSE. 

  1. BSE 

BSE (earlier known as Bombay Stock Exchange) is the oldest stock exchange in Asia and figures in the top 10 stock exchange globally (in terms of market capitalization). BSE is also credited as the fastest exchange in the world with a trade speed of 6 microseconds (lesser time than what we all will take to read this sentence!)

Founded in 1875, BSE has played a pivotal role in developing the capital market space in India. Today, it lists almost 6k companies. Sensex (BSE’s equity index) is one of the most popular and widely tracked indexes in the country. It is even traded internationally (EUREX and exchanges of BRCS countries).

  1. NSE

National Stock Exchange or NSE is India’s leading stock exchange. Incorporated in the year 1992, NSE paved the way for dematerialized and fully automated trading in India. It was established by a group of financial institutions with the objective of bringing increased transparency to capital market trading.

NIFTY50 is the flagship index of NSE and tracks the top 50 stocks listed on the exchange. With a market capitalization of USD 2.26 trillion (as on June 2020), NSE is one of the largest (in terms of traded volume) stock exchange globally.

  1. SEBI (Securities Exchange Board of India) regulates the working of the Indian capital market including the exchanges. 

  2. NSE and BSE have a similar trading mechanism. They follow an open, electronic and order-driven trading system. The USP of an order-driven market is that it brings transparency. (Order-driven means that the investor’s orders are paired with the best limit orders. There is no external intervention or concept of market makers). The exchanges are functional between Monday and Friday (9.15 am to 3.30 pm)

  3. You can log onto Niyo App to trade with these exchanges. If stock exchanges are the leading stars of the stock market, Niyo is the all-important supporting cast which completes the picture. At Niyo, we help you complete the necessary formalities (open trading and Demat account, become KYC compliant, etc.) and provide the trading platform for the best stocks to buy/sell on the exchange. 

  4. You need to place the order and know the best stocks to buy through the Niyo App and we will pass on the information to the concerned exchange. The exchange searches for a match (i.e. sell order) for that stock. 

  5. SENSEX and Nifty50, due to their sheer volume are often known as the barometers of the overall economy.


Investing in the stock market is often called a gamble. But, it is not a gamble, if you understand the basics of the market. Then it is as simple and comforting as any shopping in any other market!

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