It is crucial for any trader planning to invest in the stock market to know and understand a few aspects of trading before engaging in the industry. Investing in the stock market does come with certain risks, but you can safely trade and get excellent returns from the stock market with the proper knowledge and investment strategies.
Most of us have partial or even less knowledge of the terms related to the share market and their exact definition. In this article, we will discuss two such terms with which seasoned investors are familiar, but the beginners might wonder what these means precisely and how they differ.
The NSE and BSE are two of the leading and most prominent stock exchanges of the Indian share market. Let’s understand each of them in detail so that you can decide which one is a better option for you.
National Stock Exchange (NSE)
The National Stock Exchange is the youngest stock exchange in the country, which came into existence in 1992 and got recognition as a stock exchange in the year followed. NSE offered an effortless trading facility to the investors and was the first exchange in India to provide the latest, modern, advanced and screen-based electronic trading system.
Vision and objectives:
NSE regulate with the vision, “To continue to be a leader, establish a global presence, facilitate improvement in the financial well-being of people.” It shows mutual respect and concern for every individual and aims to fulfil the requirements of customers.
NSE intends to set up equal access to information for all investors to avoid favouritism using an efficient communication network. It has embraced the electronic system to match the standards at the international level. NSE also aims to permit shorter settlement cycles.
Bombay Stock Exchange (BSE)
Bombay Stoch Exchange was previously known by the name ‘The Native Share and Stock Brokers Association’. The BSE came into existence in 1875 founded by the most influential businessman and industrialist of the 19th century, Premchand Roychand.
BSE is the oldest stock exchange in Asia and offers various facilities, including market data services, risk management, CDSL (Central Depository Services Limited) depository services etc. It is also the world’s 10th largest stock exchange marketplace holding an inclusive market capitalization of approximately $2.3 trillion as of April 2018.
Mission and Vision:
BSE promotes an open learning platform that aims to transform the lives of individuals’ lives and organizations through innovative educational programs. It aims to create responsible leaders, thoughtful entrepreneurs who can add value and strength to society.
BSE visions to be known as the provider of financial knowledge and leadership learning in the world. In an effort to achieve the goal, it instigates and assists in the propagation of knowledge for the skill enhancement of the professionals.
Here’s a list of a few significant differences between NSE and BSE:
· Nifty is the benchmark index for NSE and Sensex is for BSE.
· Around 5749 companies are listed under BSE and 1696 under NSE.
· NSE is the largest stock exchange in India, whereas BSE is the oldest.
· BSE has a lower trading volume as compared to NSE.
· NSE trades in equity, debt and currency derivatives, whereas BSE trades in equity and mutual funds.
· BSE has comparably lower liquidity than NSE.
· NSE holds 11th rank globally, and BSE is in the 10th position.
· BSE has a transaction cost of 0.003%, whereas NSE charges 0.0325%.
· NSE provides fully automated screen trading arrangements to its customers, whereas BSE has high-speed trading.
NSE or BSE: Where should you invest?
Both the stock exchanges are profitable in terms of the services provided by them. Some company shares are listed on the BSE and not on NSE; in such cases, no choice of the stock exchange is necessary.
Investors should focus on selecting the stocks related to investments carefully rather than focusing on the stock exchanges.
The trading volume of shares in NSE are comparatively higher than the BSE; hence it is profitable to sell the high quantity stocks on NSE. Also, NSE does not permit the trading of a few shares, and therefore BSE can come as a handy option for buying and selling shares.
The majority of the brokers are members of NSE and BSE, and therefore investors can invest in either of them. Buying a share from either of the exchanges makes no difference as the brokerage charges and securities transaction taxes associated are almost the same for both the stock exchanges.
NSE is suitable for experienced traders, while for beginners, it is advisable to opt for BSE. NSE has better software that safeguards high-risk online transactions. For conventional traders, it is sensible to choose BSE and watch their investment grow while they sit and relax, but for the day traders, NSE is the right choice.
In conclusion, we can state that it is crucial to know and understand the basics and other essential aspects of trading before stepping into the industry.
Share market is highly profitable if done right.
“Share market itna gehra kuaan hai jo poore desh ki paise ki pyaas bujha sakta hai” – Scam 1992