A stock exchange is a regulated marketplace where buyers and sellers trade shares and other securities. In India, the two main exchanges are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
What does a stock exchange do?
An exchange matches buyers with sellers and records every trade at a fair, transparent price. Instead of hunting for someone who wants to sell the exact share you want, you place an order and the exchange's electronic system matches it with a counter-order automatically. It also publishes live prices, so everyone sees the same market price at the same time.
The exchange sits under the oversight of the market regulator, the Securities and Exchange Board of India (SEBI), which sets the rules that protect investors.
What are the NSE and the BSE?
- NSE (National Stock Exchange), India's largest exchange by trading volume. Its benchmark index is the Nifty 50.
- BSE (Bombay Stock Exchange), Asia's oldest stock exchange. Its benchmark index is the Sensex.
Many companies are listed on both exchanges, so you can often buy the same stock on either one. Prices for the same stock stay very close across the two because traders quickly act on any gap.
Does it matter which exchange I trade on?
For most everyday trades, no. When a stock is available on both, you can pick either exchange on the order window. See how to switch between exchanges on the order window. Thanks to interoperability of exchanges, you can also buy on one exchange and sell on the other for the same holding.
When can I trade on an exchange?
Both exchanges are open on weekdays during fixed hours and closed on weekends and declared holidays. See what the equity market trading hours are.
Things to keep in mind
- The exchange only matches and settles trades. It doesn't set a stock's price. Price comes from buyers and sellers.
- A stock has to be listed on an exchange before you can trade it there; a company usually lists through an IPO.
- Exchanges apply daily circuit limits and other safeguards to keep trading orderly.
Read next
What is the difference between the primary and secondary market? — Shares reach the exchange two different ways, and it matters which one you are buying in.