BSE vs NSE: Which Is the Best Choice for Beginners?

The first decision an Indian trader must make is choosing their place of trade. The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are the two choices available to Indian traders. Neither is lesser than the other, and they both have exceptional reputations.

You should be proud to say you trade on either of these stock exchanges. Both come with exciting investment opportunities for people with any risk tolerance. Beginners face an uphill battle when choosing between BSE and NSE as their starting point.

This blog discusses how BSE and NSE differ based on points. Hopefully, it makes choosing easier for a beginner trader!

What are BSE & NSE?

The Bombay Stock Exchange and National Stock Exchange are leading and growing Indian stock exchanges. The NSE uses the Nifty 50 as a benchmarking indicator to track the top 50 companies listed. The BSE uses the S&P BSE Sensex to track the most sizable top 30 companies listed based on performance.

Both options experience regulation from an external and authoritative board called SEBI. The SEBI (Securities and Exchange Board of India) faces the task of providing a safe trading ecosystem to every Indian. The board ensures this by watching processes and penalising participants who carry out unethical activities.

Despite a few similarities, the NSE and BSE are, in no aspect, equals! A stock training course will show the contrast when comparing these two based on qualities like liquidity and stock quantity.

1. Liquidity

A research analyst defines a higher liquidity score as a rapid ability to sell stocks to return your investment. It also refers to how easily you can do this without creating any price change.

NSE is notable for higher liquidity, especially regarding highly demanded stocks. It helps a beginner occupy a position and exit it fast when they desire.  

High liquidity is a quality of BSE, but only for select stocks. So a trader could find themself struggling to sell a stock if it's not as liquid as others.

2. Stock Trading Quantities

The availability of trading quantities is another indication of BSE and NSE differences. Higher liquidity usually proves larger volumes of stocks are available.

While both NSE and BSE show good liquidity, their trading volumes differ. The Bombay Stock Exchange trades lower quantities compared to the NSE. It doesn't make the former a poor trading option for beginners.

3. Costs to Transact

Both trade exchanges charge a transactional cost to participants. The amount or percentage does vary between the two.

The BSE attracts a marginally lower transactional cost than NSE transactions. We do not consider this a significant reason to choose either option for beginner trading.

4. Company Listings

Stock listing numbers are a measurable factor that holds weight on the final choice of trade exchange.

Being an aged and established stock establishment, the BSE holds a vast listing of companies. It is appealing to beginners who look primarily to small and mid-cap companies in which to invest.

The younger stock establishment is renowned but houses comparatively fewer listed companies. It proves the better option only if you want large-cap companies with exceptional liquidity.

5. Market Capitalisation

It refers to the total amount of the company shares held by shareholders and investors.

Since NSE holds fewer listed companies than its competitor exchange, it has a lower market capitalisation.

6. Market Indices

These indicators help traders track market performances, companies, and industry sectors. As a young trader, you must look at market indices to support a prospective transaction.

The Sensex indices assess the performances of 30 top companies on the BSE. The data collected here provides beginners with exceptional information on market trends and overall health.

Fifty impactful companies listed on the NSE are trackable using the Nifty index. This one is slightly more extensive in terms of companies it tracks.

So, Which is Better for Trading Beginners?

A trader who wants to start trading will naturally pick an option based on their needs. It's crucial to assess personal requirements before choosing an exchange without being influenced by other traders.

- Higher liquidity, more large-cap companies, and significant trading volume needs will favour NSE.

- Good liquidity, more small and mid-cap companies, lower trading volumes, and lower transaction costs lead to the BSE. Another benefit of this option is more trading options due to extensive listed companies.

Both allow for online trading, and there are several platforms that even an equity research analyst can help you with.

Conclusion

Whether selecting the National Stock Exchange or the Bombay Stock Exchange, they give an adequate chance to a beginner. The best way to overcome this challenging decision is to assess your needs and choose accordingly.

Maybe a combination of the two will best fulfil your trading requirements! But we suggest you try this only after experimenting on both exchanges. Getting a feel of both can leave you with a preference for one.