Difference between trading terms- NSE, BSE, Nifty and Sensex

There are many terms that we come across on a regular basis while trading in the markets. These include BSE, NSE, Sensex and Nifty among others. Now, you should know the difference between these terms in order to learn more about trading and start your journey successfully as an investor.

Difference between BSE Sensex and Nifty

Sensex or Sensitive Index is the stock market index under the BSE (Bombay Stock Exchange) or also known as BSE Sensex. It has a base value of 100 and is a market-weighted stock index that has shares of the top 30 companies on the basis of their financials and market performance. Sensex is calculated on the basis of the free-float market capitalization method and the performance of the top 30 stocks is reflected directly through the index level as well. The proportion of all shares issued by entities available for trading to the general public is called free-float market capitalization.

Nifty is the National Stock Exchange Fifty, the stock market index under the NSE (National Stock Exchange). It is also called CNX Nifty or Nifty 50 and has 50 stocks actively trading on the NSE and is managed/owned by the IISL (India Index Services and Products Ltd) which is an NSE subsidiary. The base value of this index stands at 1000 and it is computed on the basis of the free-float market capitalization-weighted system. The capitalization is calculated on the basis of the multiplication of equity with the market price.

Key differences are as follows:

  • Nifty comes from the National Fifty while Sensex comes from Sensitive Index.
  • Sensex is under the operation of the BSE while Nifty is operated by the NSE.
  • Nifty has 50 stocks of the top 50 companies while Sensex has 30 selected stocks of the top 30 companies.
  • The base value of Nifty stands at 1000 while it stands at 100 for Sensex.

Difference between NSE and BSE

The National Stock Exchange (NSE) is the biggest stock exchange in India by way of market capitalization. It is the first stock exchange to have introduced the system of completely automated and electronic trading in the country. Within some years, this electronic trading system has fully replaced the share trading system that is based on paper, involving physical share certificates as well. The stock exchange also comes with its benchmark index or Nifty or Nifty 50. It gets its value from the top 50 biggest and most frequently traded entities listed upon the NSE. NSE has also been adjudged as the biggest exchange in the derivatives category across the world by way of the number of contracts that have been traded.

The BSE (Bombay Stock Exchange) is the older counterpart for the NSE. It commenced operations in 1875 under the acronym of The Native Share & Stock Brokers Association. This made it the oldest Asian stock exchange and it switched fully to electronic trading in the year 1995. It has its own benchmark index named Sensex which was introduced in the year 1986. It is a weighted average value for the top 30 companies listed upon this exchange.

Key differences are as follows:

  • BSE is the oldest Asian stock exchange, having existed from the 18th NSE came into being around less than 30 years earlier. BSE is at number 10 in global stock exchange rankings while NSE stands at number 11.
  • The National Stock Exchange has adopted electronic trading faster, having this completely electronic system from its incorporation itself, promoting trading in a paperless format. BSE has switched only to electronic trading in the year 1995 with its BOLT or BSE On-Line Trading mechanism.
  • NSE has another advantage over BSE with regard to derivatives contracts. Two of its key indices, namely the Bank NIFTY and Nifty 50, are hugely liquid while coming with the contracts that are most frequently traded in the Indian derivative category. The BSE has sizably lower volumes amongst traders and investors alike.
  • Listed company count-wise, the BSE remains ahead of its counterpart, the NSE. The NSE has 1600+ companies listed in its exchange while more than 5,000 companies have earned BSE listings on the exchange. The difference is sizable although it should be stated that the BSE has functioned for a far longer period in comparison to the National Stock Exchange or NSE.
  • The BSE (Bombay Stock Exchange) is the solely listed exchange in the country. The BSE also has its listing on the rival platform which is the National Stock Exchange (NSE). NSE also had its plans for getting listed upon a stock exchange in the past although there were several procedural and legal matters that kept things on the backburner.

These are the key differences between the terms NSE, BSE, Sensex and Nifty that you should be aware of. Due diligence is advised before investing your hard-earned anywhere.