Back in the days, every city had an Exchange eg: Calcutta Stock Exchange, Bombay Stock Exchange, Bangalore Stock Exchange etc.NSE broke the barrier of trading region-wise by allowing traders to trade across regions which served as a big boon to the trading community who now weren’t restricted to trading with people of the same region, thereby giving them a bigger exposure.
I also believe its because NSE adopted to technology faster and allowed online trading possible which broker the hurdle of having to be in a certain place to trade.
Along with this NSE also replaced the settlement from the traditional paper based system to the electronic system which ensured faster settlements.
There was a paradigm shift in the broking industry when NSE set up the NSDL (Depository) which allowed investors to hold stocks electronically. This step was a big leap in the Indian Financial markets which was used to the paper based settlement of equities which resulted in substantial problems such as delays,bad delivery etc.
Also NSE understood the traders better and launched better trading products which kept the trader/investor trading with them.
Having said that, BSE has also warmed up in the recent past and is trying catch up on the technology front. The competition only serves as an advantage to the traders/investors 