What are the major stock exchanges in India?

The stock market in India is one of the most dynamic and robust markets globally, with a history spanning over 100 years. Two of the largest and most prominent stock exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). 

Apart from these, several other exchanges cater to specific needs like commodities and international trading. In this blog, we will explore the list of stock exchanges and help you understand the landscape of trading in India. Let's begin by addressing some key questions about the major stock exchanges in India and how you can buy stocks online.

What is a stock exchange, and how does it work in India?

A stock exchange is a marketplace where buyers and sellers trade securities, including stocks, commodities, and currencies. These trades are conducted within specific hours on business days, facilitated by exchanges such as NSE and BSE. In India, the Securities and Exchange Board of India (SEBI) ensures the smooth functioning of the stock market and protects investor interests.

The stock exchange provides a platform where individuals can trade either through brokers or online trading platforms. With advancements in technology, buying stocks online has become a seamless process, and both retail and institutional investors widely use only trading platforms in India.

What is the Bombay Stock Exchange?

The Bombay Stock Exchange (BSE), established in 1875, is the oldest stock exchange in Asia. Located in Mumbai's Dalal Street, it has a significant history, evolving from a gathering of brokers under a banyan tree to one of the world's most valuable exchanges. The BSE introduced Sensex in 1986, which tracks the top 30 trading companies across various sectors, serving as a barometer for the Indian stock market.

The BSE offers trading in a range of financial instruments, including equities, derivatives, commodities, and currencies. It launched an initial public offering (IPO) and is also listed on the National Stock Exchange. The exchange has expanded its product offerings over the years, providing futures and options contracts across various indices and commodities like gold, silver, crude oil, and agricultural products.

What is the National Stock Exchange?

The National Stock Exchange (NSE), established in 1992, revolutionised trading in India by introducing electronic trading. It eliminated the paper-based settlement system, providing a more efficient, transparent, and accessible trading platform. The NSE was recognised by the SEBI in 1993 and began operations in 1994 with the launch of its wholesale debt market. Shortly thereafter, it introduced the cash market segment.

NSE's most well-known index, NIFTY 50, comprises the top 50 companies listed on the exchange, offering a snapshot of market performance. Apart from equity trading, NSE offers a variety of trading options, including commodities, currency derivatives, and debt instruments. The National Securities Depository Limited (NSDL), established by NSE, provides depository services, allowing investors to securely hold and transfer stocks electronically.

How does NSE compare to BSE?

When comparing NSE vs BSE, several factors come into play, such as trading volumes, market capitalisation, and the type of instruments offered. Here are some key points that differentiate the two:

1. Age and legacy: BSE is much older, established in 1875, whereas NSE started in 1992.
2. Trading volumes: NSE usually has higher trading volumes than BSE, making it more attractive for day traders seeking liquidity.
3. Indices: BSE's main index is Sensex, while NSE's primary index is NIFTY 50.
4. Technology and trading systems: NSE's electronic trading system set the standard for trading in India. However, BSE has caught up with technological advancements, offering a robust trading platform.
5. Listing requirements: NSE generally has stricter listing requirements than BSE, which may attract larger companies.

Ultimately, both exchanges have a considerable number of listed companies, and investors can choose to buy stocks online via either platform.

What other stock exchanges are there in India?

Beyond NSE and BSE, India has several other stock exchanges catering to different market needs:

1. Multi Commodity Exchange (MCX): Established in 2003, MCX is India's largest commodity exchange, dealing in both agricultural and non-agricultural products like metals, bullion, and energy commodities. It offers trading in futures and options contracts across various commodities.
2. National Commodity and Derivatives Exchange (NCDEX): NCDEX focuses primarily on agricultural commodities, offering futures contracts for products like grains, pulses, and spices.
3. India International Exchange (India INX): Launched in 2017, India INX is the country's first international stock exchange, located at GIFT City, Gujarat. It operates with a state-of-the-art technology platform and offers trading in derivatives, including commodities, equities, and currencies.
4. NSE IFSC: A subsidiary of NSE, located in GIFT City, offering similar products to India INX. It aims to facilitate offshore trading in international financial instruments.
5. Calcutta Stock Exchange (CSE): One of the oldest stock exchanges in India, it has faced challenges in recent years, including trading suspension. While still a registered exchange, it operates on a limited scale.
6. Metropolitan Stock Exchange (MSE): Offers trading in currency derivatives, debt market instruments, and equities, though it is smaller compared to NSE and BSE.

Which stock exchange is better for trading in India?

Deciding on a stock exchange to trade in India largely depends on the investment goals and types of assets an investor seeks to trade. Here are some considerations:

1. For equity trading: Both NSE and BSE are suitable, but NSE may offer higher liquidity due to greater trading volumes.
2. For commodities: MCX and NCDEX cater to different commodities, with MCX offering a broader range of non-agricultural products.
3. For international exposure: India INX and NSE IFSC provide opportunities for trading international derivatives.
4. For historical significance: BSE's legacy and wide range of listed companies make it an appealing choice for long-term investors.

How can you buy stocks online in India?

Buying stocks online has become increasingly popular due to the convenience of trading platforms in India. Investors can register with a broker offering access to NSE, BSE, or other exchanges. After completing the KYC process, they can buy stocks online using the broker's trading platform or mobile app.

What should you consider when choosing a stock exchange?

Investors should evaluate factors such as trading volumes, index representation, liquidity, and the range of products offered by the exchange. While NSE and BSE are the go-to's for most equity traders, commodity traders may prefer MCX or NCDEX, and international investors could consider India INX or NSE IFSC.

India's stock market ecosystem is diverse, offering multiple options for investors to participate in different asset classes. With a better understanding of the major stock exchanges in India, including NSE and BSE and other specialised exchanges, investors can make informed decisions about where and how to buy stocks online.