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BSE Vs. NSE: Which Stock Market Should You Choose as a Beginner Investor?

The Bombay Stock Exchange has the distinction of being the oldest stock exchange in the country, while the NSE is the largest. How do you choose between these two? Check out this guide for handy tips on finding the right stock market, that suits your specific trading and investment needs.

As an individual trader, when you open an account with a broker or a brokerage platform, they buy or sell shares for you from a particular stock market like the Bombay Stock Exchange or the National Stock Exchange). Your broker may be a member of a particular stock exchange or even both these exchanges.

Coming to the pressing question, “As an individual trader, which stock exchange should you focus on? Does a particular stock exchange offer significant advantages over the other?”

You can find the answers to these questions, right here. Before we dive into the topic, let’s get the basics right.

What is the Bombay Stock Exchange?

Bombay Stock Exchange is the oldest stock exchange in Asia and was started in the year 1875. The exchange is located in Dalal Street, Mumbai. Sensex is the key index used to monitor the performance of the exchange and contains a list of 30 key stocks.

What is the NSE?

NSE or the National Stock Exchange was introduced in 1992 and is also located in Mumbai. It was the first demutualised electronic exchange in India and was the first to provide a fully-automated screen-based trading system. Nifty is the key index used for tracking the performance of the NSE and includes 50 key stocks.

Which One to Choose? Sensex vs Nifty

No single answer fits all. Here, we run through different scenarios, thereby helping you make the right choice in each case.

What to do if a particular stock is listed only in the Sensex or the Nifty?

Making a choice in this situation is child’s play. Some stocks are listed on only one exchange. In such cases, you have no option but to go the market where the particular stock is listed.

What to do if a stock is available on both the Exchanges?

In such cases, make sure to compare prices on both. Due to the variations of the share volume available on both exchanges, there may be slight variations in the prices. If you’re selling a share, then look for the exchange that offers you a higher price. On the other hand, if you’re looking to buy a share, then choose the exchange that offers the lower price.

If you’re using a broker, who trades on both stock markets, then the brokerage fee charged by your broker and the Securities Transaction Tax remains the same, irrespective of the stock market you use.

Should Day Traders choose the Nifty or Sensex?

If you are a day trader, then the high liquidity, large volume of shares and automated tools of the NSE may work better for you. This doesn’t mean BSE isn’t suited for day trading. It’s just that NSE has an easier learning curve for new day traders. Once you master the nuances of day trading, you can easily switch between the two exchanges, based on your specific requirements.

Final Thoughts

If you are looking to sell large volumes of shares, then the National Stock Exchange may be better for you, as it offers high liquidity. Otherwise, there's not much of a difference between the two, regarding the advantages they offer to regular individual traders. Ultimately, the price is what most traders use to decide between the Nifty and the Sensex.
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