# National Stock Exchange of India Limited (NSE): What It Is and How It Works

## What Is the National Stock Exchange of India (NSE)?

The National Stock Exchange of India (NSE) is India’s largest financial market. Incorporated in 1992 and launched in 1994, the NSE has developed into a sophisticated electronic market.

As of November 2024, the NSE was the seventh-largest stock exchange in the world, as measured by [market capitalization](https://www.investopedia.com/terms/m/marketcapitalization.asp).

In January 2024, its market capitalization and that of the [Bombay Stock Exchange (BSE)](https://www.investopedia.com/terms/b/bombaystockexchange.asp) combined reached $4.33 trillion, making India the fourth-largest stock market in the world, passing Hong Kong.

### Key Takeaways

*   The NSE is India’s largest financial market.
*   It was the first exchange in India to provide modern, fully automated electronic trading.
*   The NSE is the largest private wide-area network in India.
*   The stock exchange has been a pioneer in Indian financial markets, with the first electronic limit order book to trade derivatives and exchange-traded funds (ETFs).

## Understanding the National Stock Exchange of India (NSE)

Trading on the NSE commenced in 1994 with the launch of the wholesale debt market and then a cash market segment shortly thereafter. Today, the NSE conducts transactions in the [equity](https://www.investopedia.com/terms/e/equitymarket.asp), wholesale [debt](https://www.investopedia.com/ask/answers/071415/what-are-differences-between-debt-and-equity-markets.asp), and [derivative markets](https://www.investopedia.com/ask/answers/052715/how-big-derivatives-market.asp).

The NSE offers a solid market infrastructure and is seen as a driving force behind India’s economic growth. Its high standards of operation and corporate governance underscore the attention it places on investor protection and access to capital.

The NSE maintains market indices that track various market capitalizations, volatility, specific sectors, and factor strategies. One of the more popular of these indexes is the [CNX Nifty 50 Index](https://www.investopedia.com/terms/s/sp_cnx_nifty.asp), the first of more than 400 Nifty-branded investments offered by the NSE.

The Nifty 50 Index tracks the largest and most liquid assets in the Indian equity market. It’s composed of 50 companies and covers 15 sectors of the Indian economy.

U.S. investors can gain exposure to the index by investing in an [exchange-traded fund (ETF)](https://www.investopedia.com/terms/e/etf.asp) that tracks it, such as the iShares India Index ETF ([XID](https://www.investopedia.com/markets/quote?tvwidgetsymbol=XID)).

In March 2025, the NSE’s market capitalization was $4.8 trillion. The value of equity shares traded for that month was $214.99 billion.

The CNX Nifty 50 Index should not be confused with the compiled list known as the [Nifty Fifty](https://www.investopedia.com/ask/answers/08/nifty-fifty-50.asp). The Nifty Fifty is not a benchmark index but does contain the names of companies with global reach, strong balance sheets, and consistent growth.

### 2,720

The number of companies listed on India’s National Stock Exchange in March 2025.

## Other Considerations

The NSE is located in Mumbai and is owned by a group of India’s leading financial institutions. It was established to bring greater transparency to the Indian capital market.

It was the first exchange in India to provide fully automated [electronic trading](https://www.investopedia.com/articles/investing/110713/basics-mechanics-behind-electronic-trading.asp) and the first with an electronic [limit order book](https://www.investopedia.com/terms/l/limitorderbook.asp) to trade [derivatives](https://www.investopedia.com/terms/d/derivative.asp) and ETFs.

Since its inception, its focus on modern trading systems has delivered to investors a securities market that’s efficient, transparent, and growing in popularity.

The exchange supports more than 3,000 [very small aperture terminals (VSATs)](https://www.investopedia.com/terms/v/vsat.asp), making the NSE the largest private wide-area network in the country.

Ashishkumar Chauhan is the managing director and CEO of the exchange.

## Benefits of the National Stock Exchange of India (NSE)

The NSE is a premier marketplace for companies that wish to list on a major exchange. The sheer volume of trading activity and application of automated systems promote greater transparency in trade matching and the settlement process.

This in itself can boost visibility in the market and lift investor confidence. Using cutting-edge technology also allows orders to be filled more efficiently, resulting in greater [liquidity](https://www.investopedia.com/terms/l/liquidity.asp) and accurate prices.

## How Old Is India’s NSE?

The NSE was established in 1992 but didn’t commence operations until 1994.

## What Is the NSE’s Purpose?

The exchange believes its purpose is to improve the financial well-being of people. Key characteristics are reliability, expertise, innovation, and trust.

## What Roles Does the NSE Have?

The roles that the Indian stock exchange sees for itself are “exchange, regulator, index provider, data and analytics, IT services, educator, and market developer.”

## The Bottom Line

India’s National Stock Exchange has grown steadily in value and popularity. It is the largest stock exchange in India, followed by the BSE.

In January 2024, India became the fourth-largest stock market in the world when the combined market capitalization of the NSE and the BSE reached $4.33 trillion.

> **Article Sources**
>
> 1.  National Stock Exchange of India. “[History & Milestones](https://www.nseindia.com/national-stock-exchange/history-milestones).”
>     
> 2.  Forbes India. “[Top 10 Largest Stock Exchanges in the World by Market Cap](https://www.forbesindia.com/article/explainers/largest-stock-exchanges-world-market-cap/95312/1).”
>     
> 3.  Bloomberg. “[India Tops Hong Kong as World’s Fourth-Largest Stock Market](https://www.bloomberg.com/news/articles/2024-01-23/india-overtakes-hong-kong-as-world-s-fourth-largest-stock-market).”
>     
> 4.  National Stock Exchange of India. “[About NSE Indices](https://www.nseindia.com/nse-indices).”
>     
> 5.  NSE Indexogram. “[Nifty 50](https://www.niftyindices.com/Factsheet/ind_nifty50.pdf).” Page 1.
>     
> 6.  BlackRock. “[XID: iShares India Index ETF](https://www.blackrock.com/ca/investors/en/products/239732/ishares-india-index-etf).”
>     
> 7.  World Federation of Exchanges, Focus. “[Market Statistics—May 2025](https://focus.world-exchanges.org/issue/may-2025/market-statistics).” Select “Domestic Market Capitalization.”
>     
> 8.  World Federation of Exchanges, Focus. “[Market Statistics—May 2025](https://focus.world-exchanges.org/issue/may-2025/market-statistics).” Select “EOB Value Traded.”
>     
> 9.  World Federation of Exchanges, Focus. “[Market Statistics—May 2025](https://focus.world-exchanges.org/issue/may-2025/market-statistics).” Select “Listed Companies.”
>     
> 10.  National Stock Exchange of India. “[Corporate & Branch Office](https://www.nseindia.com/contact/contact-us).”
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> 11.  Appreciate. “[What Is the Difference Between NSE and BSE?](https://appreciatewealth.com/blog/difference-between-nse-and-bse)”
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> 12.  National Stock Exchange of India. “[Board of Directors](https://www.nseindia.com/structure-and-key-personnel/board-of-directors).”
>      
> 13.  National Stock Exchange of India. “[Purpose, Vision & Values](https://www.nseindia.com/national-stock-exchange/purpose-vision-values).”