Stock Exchanges in India: Know the Types of Stock Exchange

There are eight active stock exchanges in India.
BSE Ltd., Calcutta Stock Exchange Ltd., Indian Commodity Exchange Limited, Metropolitan Stock Exchange of India Ltd., Multi Commodity Exchange of India Ltd., National Commodity & Derivatives Exchange Ltd., National Stock Exchange of India Ltd. and NSE IFSC Ltd. are the current active stocks exchanges in India.

There are more than 2 stock exchanges in India. Since NSE and BSE are the largest stock exchanges they are more popular and traded platforms in India. The other stock exchanges in India are BSE Ltd., Calcutta Stock Exchange Ltd., Indian Commodity Exchange Limited, Metropolitan Stock Exchange of India Ltd., Multi Commodity Exchange of India Ltd., National Commodity & Derivatives Exchange Ltd., National Stock Exchange of India Ltd., and NSE IFSC Ltd.

The BSE Bombay Stock Exchange and NSE National Stock Exchange are the best shares or stock markets in India. Most of the stock market trading takes place on NSE and BSE in India. BSE was established prior to NSE. BSE was established in the year 1875 while NSE was launched in 1992. Both the stock exchanges in India provide an electronic trading system, follows a similar listing mechanism, trading hours, transaction initiation, and settlement process. Almost all of India’s top companies are listed on both the stock exchanges. No doubt BSE is an older stock exchange than NSE but NSE leads in terms of the daily trading volume. Since both the stock exchanges compete with each other to get a purchase or sell order the cost is similar and effective. Moreover, both the exchanges are market efficient, innovative, and digitized. The price difference on both the stock exchanges is very marginal leading to a very low or negligible chance of arbitrage. NSE has more liquidity than BSE, which makes it a better choice. However, keeping other factors in mind it can be concluded that both are best. An investor may consider any or both the stock exchanges.

NSE National Stock Exchange was launched in 1992. NSE is the largest stock exchange in India. Most of the stock market trading takes place on NSE and BSE in India. NSE has a higher daily trading volume and hence provides higher liquidity. NSE provides a digitized electronic trading system to its investors. As of 2020, the market capitalization of NSE was $2.27 trillion. With all these factors NSE is the largest stock exchange in India.

Limit Price is a kind of purchasing order for securities. Limit price or order allows the investor to specify a price at which the trade will be executed whether it is buying or selling securities. Once the securities hit the specified price or better, the trade will be executed against the investor.
The limit price guarantees the investor that the trade will be performed once securities reach the desired price and the opportunity will not be missed. However, on the other hand, good trading opportunities might be missed if the shares never reach the price requested. Hence, the limit must be decided after a thorough and detailed analysis. No doubt the limit price controls the execution but it might also lead to an opportunity loss. An investor can miss opportunities in a fast-moving market.

There are different types of stocks based on ownership, market capitalization, dividend payments, risk, and price trends.
Stocks based on ownership- Common stocks, preference stocks, Hybrid stocks, Stocks with embedded-derivative options. Common stocks and preference shares differ from each other on the parameter of priority. Preference stocks get a priority on the distribution of surplus on the occasion of distribution of profits and dividends. Hybrid Stocks are also known as convertible preferred shares. These are the preference shares that carry an option to be converted into common stocks at a specified time. The stocks embedded with a derivative option carry both callable and putable options. Under this option, the company can call or buy and the investor can put or sell the shares. These are not very commonly available.
Stocks based on market capitalization- The classification of these depend on the market value of the total shareholding of a company. Market capitalization is the share price multiplied by the number of shares. These stocks are large cap stocks, mid cap stocks, and small cap stocks. Large cap stocks are leading companies like Reliance, TATA. These are often blue-chip stocks. Mid cap stocks are companies with a market capitalization in the range of Rs. 250 crore and Rs. 4,000 crore. Small cap stocks are companies with a market capitalization of less than Rs 250 crores.
Stocks based on dividend payments- These are income stocks and growth stocks. The income stocks pay a dividend higher than their share price. These are also known as dividend-yield or dog stocks. These stocks are preferred by investors who are seeking a regular income. On the other hand, growth stocks usually provide lower dividends. These stocks prefer reinvesting their income into their operation to grow the company. With the growth of the company, its share price also grows.
Stocks based on risk- These stocks are relatively riskier than others due to frequent fluctuations in the share price. Blue-chip stocks are well-established companies that have lower liabilities and higher growth potential. Beta stocks are stocks with a higher risk. A higher beta means higher volatility. A beta greater than 1 is considered riskier than other stocks.

Yes, you can buy on NSE and sell on BSE. However, you need to take the delivery of the shares. You cannot simply square off a transaction by involving both the exchanges.

NSE National Stock Exchange is regulated by the Ministry of Finance, Government of India. NSE is not a privately owned company. The shares of NSE are held by the general public and Trading Members and Associates of Trading Members. Among the general public holding, the shares are majorly held by FDI, corporates, Financial Institutions/ Banks, Insurance Companies, Venture Capital Funds, individuals, etc Shri Ashishkumar Chauhan is the MD & CEO of BSE Bombay Stock Exchange. He joined BSE in the year 2009 as a Deputy CEO. In the year 2012, he was appointed as the CEO of the Bombay Stock Exchange. Mr. Chauhan is one of the founders of the NSE National Stock Exchange. He worked from the year 1992 to 2000 at the National Stock Exchange. He is popularly known as the father of modern financial derivatives in India. His contribution to the derivatives market is commendable. The shareholding of BSE comprises banks and mutual fund companies, foreign financial institutions, the general public, and financial institutions.

BSE Bombay Stock Exchange is the oldest exchange in India. BSE was established in the year 1875 by Premchand Roychand. In 1957 the Bombay Stock Exchange was recognized by the Government of India under the Securities Contracts Regulation Act. In 1986 BSE introduced its first benchmark S&P BSE Sensex index. The S&P BSE Sensex index is used as a benchmark for measuring the overall performance of the stock exchange. In 1995, BSE adopted a fully electronic trading system which was developed by CMC Limited. In 2000, BSE introduced its derivatives market with the S&P BSE SENSEX futures contracts. In 2012 the Bombay Stock Exchange partnered and became a partner exchange under the United Nations Sustainable Stock Exchanges Initiative.