NSE Is Better Than BSE

Abstract

Indian Market is an open economy since 1991. Till date many reforms have taken place in the Indian Market. One such Major Change was the coming of the National Stock Exchange (“NSE”) for trading of Shares and Commodities other than the Bombay Stock Exchange (“BSE”). From the emergence of NSE it is always a hot topic as which Exchange is better. Here in this Research Paper I have tried to answer this question in favor of NSE. The two largest and most prominent stock exchanges in India are the BSE and the NSE. While the BSE has the distinction of being the oldest stock exchange in Asia, established in 1875, the NSE has quickly grown to prominence since its creation in 1992. While these two markets dominate in India there are clear differences between the two that can impact your decision to invest. When you open an account to buy or sell shares with a broker, they generally are members of both the exchanges ie BSE and NSE. So, if you have an account at Zerodha when you buy shares you have an option of buying the same at the BSE or the NSE. Is it advantageous to buy and sell shares at BSE or NSE? Well, the only advantage that an investor will have is in terms of price. So, if you are buying a share online you can look at the price on both the exchanges and buy where the price is lower. Again, if you are selling a share you can look at the price on both the exchanges and sell at the exchange where it is higher. For example, if you want to sell Reliance and if you see on the BSE the stock is quoting at Rs 1000 and NSE it is quoting at Rs 1002, you are better off selling shares on the NSE. However, this will make sense only for market orders. If you want to place a limit order to sell Reliance shares at Rs 1006 it does not make a difference on which exchange you want to sell. There is no other difference in buying on either exchange for a limit order. The brokerage charged by the broker, the Securities Transaction Tax are all the same on either of the exchanges. The volumes of shares is generally higher on the NSE, which means if you are selling sizeable quantities the NSE could be a better proposition. It is almost impossible to get similar prices on both the exchanges. There is bound to be some price differential. Also, some shares are not traded on the NSE, which will force you to buy or sell the shares on the BSE. For example, Claris Lifesciences, Spice Jet are examples of stocks that are not traded on the NSE. Interestingly, the largest number of stocks in the world are listed on the BSE.