What is a Stock Exchange? (NSE vs BSE)
A stock exchange is the marketplace where shares are bought and sold. India has two main ones — NSE and BSE. Here is how they work and what Nifty and Sensex actually mean.
Key takeaways
What is a stock exchange?
A stock exchange is a marketplace where buyers and sellers come together to trade shares of companies. Just like you go to a market to buy and sell vegetables, investors go to a stock exchange to buy and sell stocks. In India, there are two main stock exchanges: NSE and BSE.
BSE — Bombay Stock Exchange
Established in 1875, BSE is Asia's oldest stock exchange. It is located in Mumbai. The index that tracks the performance of the top 30 companies on BSE is called the Sensex — short for Sensitive Index. When you hear 'Sensex crossed 75,000', it means the combined value of those top 30 companies has reached that level.
NSE — National Stock Exchange
NSE was established in 1992 and quickly became India's largest exchange by trading volume. The index that tracks the top 50 companies on NSE is called the Nifty 50. Most mutual funds and ETFs in India use the Nifty 50 as their benchmark — the standard they try to match or beat.
What is an index and why does it matter?
An index is like a scoreboard. It tracks the combined performance of a selected group of companies and gives you a single number that tells you how the overall market is doing. When you hear 'Nifty is up 200 points today' it means those top 50 companies, on average, performed better than the previous day. As an investor, watching Nifty gives you a quick pulse of the entire market.
Do you trade directly on the exchange?
No. As an individual investor, you cannot go directly to NSE or BSE. You trade through a registered broker — like Zerodha or Groww — who places your order on the exchange. The Indian stock market is open Monday to Friday, 9:15 AM to 3:30 PM. It is closed on weekends and public holidays.