What is the Difference between BSE and NSE cover

What is the Difference between BSE and NSE?

In this article, we are going to discuss the difference between BSE and NSE, the two biggest stock exchanges in India. However, in order to study the Bombay stock exchange (NSE) and the National Stock Exchange (NSE), first, we need to understand what is a stock exchange and its importance. Let’s get started.

What is the Stock Exchange?

According to the Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as, “an association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.

The stock exchange is a very important component of the capital market for the sale and purchase of financial and industrial securities and bonds. It is a place that is well organized and systematic as it is regulated under strict conditions and rules. The stock exchange performs various functions and offers services to a wide range of investors and other borrowers. 

The main features of any stock exchange market can be summed up as follows:

  1. The stock market serves as a market for securities where bodies from the corporate sector, governmental, non-governmental or semi-governmental come together to sell and buy these securities.
  2. It also serves as a secondary market where old and existing second-hand securities, shares and bonds are dealt with.
  3. Stock exchange functions as the regulator of securities. It tries to ensure free and fair trading.
  4. In order to serve as a safe haven for investors and companies, the Stock Exchange involves in trading of only official and listed securities. The securities which are not listed called the unlisted securities are not allowed to be traded on the exchange but may trade through Over the trade (OTC) counters.
  5. The way only listed securities are allowed, in the same manner, only the authorized investors are allowed. Investors can only participate in buying or selling the securities at the Stock Market through official or authorized brokers only.
  6. It works as a recognized indicator of the development of the economy of the country. It is also the best reflector of industrial growth and corporate stability.

Now that you understand the basics of stock exchanges, let’s discuss the difference between BSE and NSE.

In India, there are two main stock exchange markets, namely the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Let’s start with BSE.

Bombay Stock Exchange (BSE)

bombay stock exchange bse

The Bombay Stock Exchange or BSE is the oldest which was established in 1875 in Dalal Street of Bombay (now Mumbai). It was earlier known as ‘the native share and stockbrokers association but got recognized as the only important stock market of India under the Securities Contract Regulation Act of 1956.

Here are some of the key features of the Bombay Stock Exchange:

  1. The BSE is the first and oldest stock exchange market of Asia which offered such a huge variety of services.
  2. It has over five thousand companies listed as of the year 2018.
  3. “Sensex” is the benchmark index of the Bombay Stock Exchange. Other popular indexes of BSE are BSE largecap, BSE midcap, BSE 500, etc.
  4. As of April 2018, BSE is the world’s 10th largest stock exchange with an overall market capitalization of more than $2.29 trillion dollars.

bse sensex chart

National Stock Exchange (NSE)

National Stock Exchange (NSE)

The National Stock Exchange or NSE is the country’s leading stock exchange marketplace. It was India’s first digitalized stock exchange in the country. NSE was established in the year 1992 to decrease the monopoly of BSE in the Indian stock market. With NSE’s coming into existence, it brought about an electronic exchange system that did away with the practice of the paper-based exchange system.

Here are some of the Key features of National Stock Exchange:

  1. NSE was established in 1992 to end the monopoly of BSE and one of the biggest stock exchanges in India.
  2. Over 1,800 companies are publically traded on the National Stock Exchange.
  3. “Nifty 50″ is the benchmark index of NSE. Other popular indexes of NSE are Bank Nifty, Nifty 100, Nifty Small cap, Nifty sectoral indexes like Nifty Auto, Nifty Pharma, etc. 
  4. As of April 2018, National Stock Exchange has a total market capitalization of more than US$2.27 trillion, making it the world’s 11th-largest stock exchange.

nifty nse chart

Also read: 10 Largest Stock Exchanges in the World 

The Difference between BSE and NSE

Although both of the stock exchange markets are very important in India, there are some ground differences which we need to take into account:

  1. Both the Bombay Stock Exchange and the National Stock Exchange are the leading exchange marketplaces in India. However, the oldest one is the Bombay Stock Exchange established in 1875 and the National Stock Exchange is a younger exchange established in 1992.
  2. Both the National Stock Exchange and the Bombay Stock Exchange were recognized by the Securities and Exchange Board of India (SEBI) in the year 1993 and 1957 respectively.
  3. The number of listed companies on the National Stock Exchange is around 1,800 and around 5,000 for the Bombay Stock Exchange.
  4. The electronic system of exchange was first introduced under the National Stock Exchange in the year 1992 and later in the Bombay Stock Exchange in 1995 under BOLT i.e. BSE On-Line Trading.
  5. The official index used by the National Stock Exchange is the NIFTY 50 while for the Bombay Stock Exchange, it is the SENSEX.
  6. The National Stock Exchange’s index — Nifty 50, computes the top fifty stocks listed on the NSE. And on the other, the Bombay Stock Index, SENSEX accounts for the top thirty stocks on BSE.
  7. Another major difference between the two relates to the volume of trading of individual stocks which is higher in the National Stock Exchange than in the Bombay Stock Exchange. 

Quick Note: While trading or investing in the Share market, you can buy stocks from either of the stock exchanges. It does not matter much about which stock exchange you prefer as most of the big and popular companies are traded on both NSE and BSE.

Closing Thoughts

Apart from the differences, we can say that both the stock exchange markets are nationally and globally well renowned. The trading mechanisms, settlements and trading hours of both the stock exchange marketplace are almost similar.

On top of it, both of them are designated as the premium stock exchange markets recognized by the Securities and Exchange Board of India (SEBI). The Bombay Stock Exchange and the National Stock Exchange are under very tight control and regulation by the SEBI implying that both are under the same provisions.

Also read: What is SEBI? And What is its role in Financial Market?

By way of conclusion, we can add that the choice of any investor to participate in the trading of security is subjected to personal choice and therefore, can be different from one investor to another.

However, it is said that the National Stock Exchange is for those investors who want to involve in high volume day trade and derivatives trading. It has better software as compared to its rival, the Bombay Stock Exchange for any high-risk transactions made online. The Bombay Stock Exchange is an ideal marketplace for those investors who are a little conservative in nature who choose to invest and wait for their investments to grow gradually.

Anyways, you can trade or invest in equities through any of the stock exchanges, NSE or BSE, and may not find a noticeable difference. According to your choice and activity, you may decide on where to sign up and participate.

10 Best Personal Finance Books Of All Time Cover

10 Best Personal Finance Books Of All Time!

10 Best Personal Finance Books Of All Time!

“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.”  -Dave Ramsey

These wise words of David Ramsey reflect the necessity of everyday lives, that is, learning about healthy spending habits and better ways of investment to lead a financially sound life.

Today in this world of never-ending expansion of economies, rise in prices, and increasing demands, individuals suffer from financial problems like debts, losses and increasing expenditure. To understand more about better ways of budgeting and inculcation of financially sound habits in order to overcome these problems, you should read books on personal finance where you can learn all about your personal income, expenditure, and savings.

10 Best Personal Finance Books Of All Time

Given below are the top ten books on personal finance which can shape your mind towards the same.

1. Rich Dad Poor Dad by Robert T. Kiyosaki

rich dad poor dad by robert kiyosaki What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki- You should always start with the best and the consistently number one ranked book on personal finance has undoubtedly been this Kiyosaki’s masterpiece.

The book talks about two different dads living two different lives altogether. One dad is rich and the other is comparatively poor. The book busts the misconception of relating highly educated to being rich and vice-versa. The book beautifully explores the utility of investment and how you can save money by working for it to make the money work for you later. The lucidity of the book makes it easy to read and understand. It definitely helps in improving your financial intelligence.

2. The Millionaire Next Door by Thomas J. Stanley & William D. Danko

the millionaire next door

This book is great for beginners who have just entered the realm of personal financing. The book is simple and easy to understand. It talks about the rudimentary concepts and instructions that should be followed and kept in mind while learning about personal finance. The author talks about establishing a healthy relationship between you and your money. Establishing goals are very important. You should choose your aim wisely and work for it.

3. The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey

the total money makeover

Well, we started this article by quoting David Ramsey and there is no reason as to why he should not be making it to this list. He has written one of the finest financial works for especially the young lot who wants to start investing and make money. Total Money Makeover talks in length about creating a well-toned budget by employing healthy money habits.

He talks about flabby expenses that are unhealthy and can push you into unending debt cycles. According to him, to be financially fit, you need to cut out those extra expenses carbs and stick to fat-free savings to get a total money makeover!

Also read: 7 Best Value Investing Books That You Cannot Afford to Miss.

4. The Money Book for the Young, Fabulous, & Broke by Suze Orman

The Money Book for the Young, Fabulous, & Broke by Suze Orman

This book on personal finance is written by a financial expert whose main focus is on the present generation who are suffering the so-called “Generation Debt”.

According to Suze, this Generation Debts accounts for people in their 20s and 30s who are graduating from their colleges with a heavy load of education loans and other student loans. They are stuck in a financial environment where the money is not generated easily, employment is not for all and therefore, they should do something to take the matters into their own hands to secure their future and make money. This book is known worldwide for its relevance and the present problem it touches that is faced by young people.

5. Think and Grow Rich by Napoleon Hill

Think and Grow Rich by Napoleon Hill

This book is very inspirational for those who want to take up their lives to new heights, those who are not afraid to act to further their lives and reaching the goals they had set. Despite the old age of the book, it contains highly relevant lessons for each one of us. It talks about the way in which you can acquire wealth.

The author highlights the importance of planning and budgeting in order to amass wealth. Book also mentions a number of achievers and their success stories. The author also talks about the need for persistence which makes all the difference between a success and a failure and most importantly, the emphasis on knowledge acquisition before wealth acquisition which is truly marvelous to read!

6. Thinking, Fast and Slow by Daniel Kahneman

Thinking, Fast and Slow by Daniel Kahneman

Daniel Kahneman who has been a recipient of the Nobel Prize has worked on this book as a reflection of his own life. This book talks about the decision making processes taken p by our mind. He talks about the capabilities of a human being when it comes to thinking. He differentiates this human mind into two systems where one is fast but emotional and the other is slow but more logical.

Through his book, Daniel tries to balance these two systems and bring about a synthesis which is better judgment and decisions. He talks about the benefits of slow thinking and how it helps in reaching to better and more reliable decisions. Lastly, he tries to cover the importance of harvesting distinct personal and professional lives and safeguarding of both.

Also read: 10 Best Mutual Fund Books Of All Time!

7. Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth by T. Harv Eker

Secrets of the Millionaire Mind- Mastering the Inner Game of Wealth by T. Harv Eker

This book by Eker acts as the bridge between aiming at success and achieving it. It is for those who believe in doing rather than just saying. This book explores mind-boggling questions like why some people become rich easily while others struggle to reach their level. Is there something different in their education or skills or training or work habits? Or is it just good luck for them? Such questions will really trigger your mind into thinking.

Eker talks about achieving success by using the blueprints of your personal money in your subconscious minds. It is these blueprints that will determine anybody’s financial lives. If your blueprint does not aim at making high levels of success, you will never be able to earn big money. It is that simple! Similar such ideas have been touched upon.

8. The Wealthy Gardener: Life Lessons on Prosperity between Father and Son by John Soforic

The Wealthy Gardener- Life Lessons on Prosperity between Father and Son by John Soforic

Do you know why this book is special? This book is special because it was written by a financially independent father for his financially dependent son. It will give you a glimpse of their lives where the father is educating his son on how to pursue his goals and further his interests.

The book talks about amassing wealth by earning excess money and saving. It talks about the ways in which one can overcome any hurdle that can land him inside a debt trap and wage slavery. He describes ways in which you can transform your financial weakness to strengths and how you should sense each opportunities and troubles before they come knocking your door.

9. The Richest Man in Babylon by George S. Clason

The Richest Man in Babylon by George S. Clason

This is a classic book when it comes to books on personal finance. This book has been appreciated by millions. The author extensively talks about the ways in which you can accomplish personal wealth. He talks about personal financial planning. The language is simple and easy to grasp.

This book is more like a guide that tries to address the present-day financial problems that you may be suffering which is offsetting you from the path of success and accomplishment. Going through the Babylonian time and Babylonian stories of rages to riches will definitely boost you up and make you your best financer to solve all the related problems. These solutions will stay with your forever and guide you throughout your path to prosperity.

10. Psych Yourself Rich: Get the Mindset and Discipline You Need to Build Your Financial Life by Farnoosh Torabi

Psych Yourself Rich- Get the Mindset and Discipline You Need to Build Your Financial Life by Farnoosh Torabi

This book comes to you by the well known personal finance star, Torabi. She talks about the importance of money and why it should be earned. The best part of Farnoosh’s work is that she extensively talks about the application of ways and methods she has discussed in order to gain wealth and success. It is more practical and handy.

According to the author, developing healthy habits, disciplined life, and a focused mindset are some of the most important essentials required to achieve your goals. A disciplined attitude can only help you grow as a financial well being. You should live in the present thinking about your future. Future planning is very important. You should work harder to earn big and thus, make every money of your count.

Also read: 3 Amazing Books to Read for a Successful Investing Mindset.

Closing Thoughts

The above-mentioned books will definitely help in building up your repository of financial knowledge. These books are not just meant for those who come from a finance background but for everyone who wants to succeed in their lives, those who want to earn and make it big.

What is Porter’s Diamond Model of National Advantage

What is Porter’s Diamond Model of National Advantage?

Porter’s Diamond Model has been the exemplary work of Michael Porter, who first published about this economic model in his book, “The Competitive Advantage of Nations” (1990). This simple but effective model aims at explaining the cause behind the reason as to why one nation tends to be more competitive than other nations in relation to a particular industry. This book also tries to look into the matter of innovations in businesses that may be more conducive to one nation and might not be possible in others.

Porter’s Diamond Model, also known as the Theory of National Advantage, is used by different economic institutions to calculate the external competitive environment. This analysis helps in giving us an understanding of the relative strength of one business than the other. On analyzing the external environment, the causes for industrial advantages for some businesses in a particular place or region can also be deciphered. In simpler terms, the Porter’s Diamond Model attempts to answer the following basic questions:

  • How does one nation end up being the most competitive in regard to a particular industry?

In Porter’s model, this nation is referred to as evolving into a home base. Some examples that we can illustrate are that of ‘China’, being the home for the production of cellphones, Germany as being the home base for car manufacturing, etc.

  • How are companies of a particular nation or region able to sustain the advantages produced by competitive economies in a certain industry? 

Porter’s Diamond Model

The answers to the above – mentioned questions lie in the determinants identified by Porter that generates a competitive advantage as mentioned above. The four determinants enumerated in Porter’s Diamond Model are as follows:

Porters Diamond Model four determinants— Factor Conditions:

Factor conditions relate to the different types of resources that are present or absent within a nation. Resources can be typed into basic and advanced ones. The basic ones include useful natural resources and the availability of unskilled labor. Advanced or ‘created’ resources include specialization and skilled knowledge and expertise, availability of capital, infrastructure, etc.

For Porter, natural resources are of less important as compared to the created resources. Competitive advantage develops in nations and in particular industries that are able to create these advanced and specialized factors.

— Demand Conditions:

Demand conditions invariably talk about the ‘home demand’ which affects how successful a particular industry within a certain nation is. A strong home demand of industries in their own nations creates a large market for them and therefore, creates opportunities for them to grow.

More demands inevitably mean more challenges, but these challenges turn the companies toward innovation and improvement. The size of the market, the growth rate of the market, etc. are some indicators of the home demand.

— Related and Supporting Industries:

According to Porter, the level of success of one industry can be related to the success of related and supporting industries. In the present economies, the role of ‘suppliers’ is a crucial one. These suppliers help in advancing innovation processes through shared resources- technical and other types of aids.

In recent times, the booming of startups has stimulated the renovation. These startups have entered into innumerable mergers with various industrial giants leading to the creation of competitive advantage.

— Firm Strategy, Structure, and Rivalry:

The internal environment in which a firm is established determines how firms are created and structured. This structuring of the firm can be influenced by a number of factors- political, economic, and social. This structuring will form the basis of creating a strategy towards the establishment of the firm.

The level of competitiveness between firms of a particular industry in one nation is marked by domestic rivalry. The more intense the domestic rivalry, the more it will push firms toward innovations, improvement and global competitiveness. Domestic rivalry in the automobile industry between various Japanese firms such as Toyota, Nissan, Honda, etc. can be cited as a perfect example.

Also read: Porter’s Five Forces of Competitive Analysis – What You Need to Know?

Additional Determinants

Apart from the above four major determinants, two other determinants can be mentioned as having an influence on the creation of a competitive advantage in a particular nation. These two determinants are:

Porters Diamond Model six determinants

— Government:

The government plays a vital role in the success of a firm or company. It is the government that provides for technical and financial aid to companies for its growth. The government has been referred to as ‘a catalyst and challenger’.

Porter believes that the market is not meant to be in the ‘invisible hands’ but the government should regulate it in order to stimulate the creation of advanced factors and therefore, leading to the development of competitive advantage. Government policies, investment in infrastructure, funding, etc. are some ways in which governments help in intensifying home demands.

— Chance:

The role of chance has not been originally discussed by Porter but it has been included in the Diamond Model as there may emerge random events like some scientific breakthrough, natural disasters or wars that might affect the established competitive positions in the society.

Summing Up

To sum up, the above mentioned six determinants in the national context- factor conditions; demand conditions; related and supporting industries; firm strategy, structure, and rivalry; government; and chances, can accelerate or deaccelerate the rate of success of a certain firm of a particular industry in a particular nation.

This success can lead to the generation of home demand which in turn results in increasing competitiveness in the global market and therefore, creates a competitive advantage for a certain firm.

Criticisms on Porter’s Diamond Model

Discrediting Porter’s Diamond Model will not justify his contribution but we cannot ignore the criticisms his theory of competitive advantage has drawn upon.

Some critics have pointed out that the list of internal determinants is limited in nature as there can be many other factors that can be listed. In other arguments, it has been noted that the inclusion of external factors has been avoided. The main focus has been more on the domestic picture and less on the global level.

Some writers have even highlighted that this Diamond Theory is not universal in nature but rather limited as it has been based on the study of only ten developed nations. Therefore, it would not be an exaggeration to pinpoint that Porter’s Diamond Model mostly applies to the researched developed countries.

Lastly, drawbacks relating to the sole application of the model on material products and not on services have been pointed out. The model fails to examine how this model will apply to the service sector of the economy.

The Pros and Cons of Credit Cards in India cover

The Pros and Cons of Credit Cards in India

The Pros and Cons of Credit Cards in India:

The nature of our society has been marked by different political, social, and economical changes through different modes and means. Out of these, the sea change brought about by technology has been very crucial. Technology has changed our outlook towards life- from communication to transportation to payments.

With the rise in the population of the Netizens today, the countries are on a ‘cashless’ spree. The e-commerce payment system has not only digitalized the whole process of transactions but has also made it convenient and easy. Some forms of e-transactions include ATM cards, Credit Card, E-wallets, Debit Cards, and Cryptocurrency, etc.

Out of all the modes of e-commerce payments, credit cards are the most common form. Credit cards are totally different from debit cards- a debit card is not a credit card. When we use a debit card, the money is being deducted from our checking account. On the other hand, when we use a credit card, we are basically borrowing money from the bank which is to be repaid later according to the directed time.

The Pros and Cons of Credit Cards in India

Credit cards allow us to make payments through borrowings against a credit limit. There are various advantages of using credit cards over debit cards. They can be summed up as:

Pros of Credit Cards in India:

  1. It helps one to go cashless. Not everyone wants to carry cash all the time. Moreover, withdrawing cash anywhere and everywhere is not feasible and convenient.
  2. There are a number of rewards associated with credit cards. Some banks provide discounts, cash backs, etc that are exclusively available on some credit cards.
  3. Buying expensive products and services is far easier from credit cards. A hefty amount is not spent at one go. You have to repay the amount in installments (EMI) with even zero interests.
  4. Credit cards have theft protection. If you lose any money or the card gets stolen, the liability is guaranteed by the bank. In contrast, if cash is lost or stolen, it is very hard to get the money back.
  5. Credit cards provide travel insurance against lost luggage, canceled trips, and even death. The coverage that one gets depends on the respective banks and offered terms.
  6. Credit cards help in the cheaper conversion of currency. Cards such as Visa or Mastercard can save up to 8% currency as compared to cash.
  7. Credit cards are the best tool to help us track our expenses. It helps us in budgeting and making effective plans.
  8. It saves money that is spent on buying extended warranties for maintenance and coverage. The advantage of extended warranties is free on purchases done on many credit cards.
  9. They are a whole lot safer to use. If you are a thrifty credit card user, you do not have to worry about excess payments and unreasonable interests. All you have to do is to repay your debts on time and maintain a good credit score.

Also read: 10 Best Credit Cards in India [With Exploding Benefits]

Pros of Credit Cards in India

Cons of Credit Cards in India:

While tallying up the pros and cons, we come at a point where we realize that no matter how common credit cards are, there are some cons that we should consider while issuing one—

  1. The threat of overspending always looms large. There are times when we tend to spend more than what is required. People go on buying their desires rather than their necessities, ending up in dire consequences. All we are left with are overburdened shoulders pressed by unthinkable amounts of debts. This vicious circle has led to the breakdown of many companies and business tycoons.
  2. Borrowings through credit cards are of the high cost. The interest charged is a little higher and it is never uniform. There is no guarantee that the rates will be constant. It can rise unexpectedly causing a huge cut in our budget and expenses.
  3. Not everyone can apply for a credit card. The requirements are just too many. If you have a low income or a weak credit history, you cannot get a credit card. In some cases, even if you meet all the requirements, you are not eligible for a credit card because it simply depends on the bank. The more connections you have, it is easier to get credit cards and loans.
  4. Maintaining a credit card is a little difficult. You not only need to have a good credit score so that the bank allows you to borrow, but you also need to pay the annual fees in order to carry on with your service with rewards. The annual fee for a few cards is high for no reason.
  5. If you are caught into the trap of overspending, misuse of funds, missed payments, you will suffer badly. You might find it difficult to get good rates for future payments or get overburdened by debts or even worse- due balances can get the bank file a lawsuit against you.
  6. The details and intricacies of credit card documents are not told properly. The statements are written in such technical words and small prints, it will be difficult to go through it. Those who do not put extra effort into actually getting it reviewed land up in some trap where the interest rates are duly high or the annual payments are increased successively without your knowledge. Therefore, getting your documents reviewed is very important.

Note: If you are yet to get a credit card, here is a quick link to check your eligibility and apply for credit cards online.

Bottom line:

By way of conclusion, we can point out that we may opt for a credit card but only keeping in mind the restrictions.

If we are ready to clear the debts on time, pay the interest on the overdue amount, maintain a high credit score and not overspend, then we should apply for it provided we meet all the requirements. Using credit cards/debit cards/ATM cards or any other means of e-payment is a sign of progress for any country, therefore, we should encourage cashless modes of payment as much as we can.