Some of the common questions which prevails across minds of most equity investors, especially the new ones are “Where should I invest in stocks?” and “Should I invest in stocks on NSE or BSE?”
As you might already know NSE and BSE are top stock exchanges in India. NSE established in 1992, is the biggest stock exchange in India, while BSE is the oldest stock exchange in India which was established in 1875.
Apart from the two, earlier there were many other stock exchanges in India like the Hyderabad Stock Exchange, Bangalore Stock Exchange Ltd., Coimbatore Stock Exchange Ltd., Mangalore Stock Exchange Ltd., Ludhiana Stock exchange Ltd., Gauhati Stock Exchange Ltd. etc. which have become defunct.
There are over 1700 companies listed on NSE while over 5500 companies are listed on BSE. It does not really matter which exchange you choose to invest in stocks as both exchanges are equally good in terms of the services they offer to investors. Rather than looking at the exchange, one should choose the stock for investment very carefully because that is what actually matters the most.
This reminds me of a famous story.
A man used to sell helium balloons of different colors outside the village. Whenever his sales were down, he used to release a balloon in the air. Seeing the balloon in the air, children in the village would come and buy balloons from him. One day a little boy asked him “Uncle if you release a black balloon in the air, would it still go up?”
The balloon seller replied “Son it is not the color of the balloon which matters. It is what is inside which matters”.
Similarly the exchange which you choose to invest in stocks does not matter. Both BSE and NSE are equally good and offer a robust technology platform for buying and selling stocks.
However, investors should note that there is always a minor price difference between NSE and BSE. For example if XYZ stock is trading at Rs.100 on NSE the price displayed could by Rs.99.
Irrespective of this difference in price, the brokerage charged by the broker and the Securities Transaction Tax remain the same on both NSE and BSE. Volumes of shares traded on NSE are generally high, so it would be a good thing to sell on NSE if you are selling a huge quantity of stocks. Some shares are not traded on the NSE, and in such cases you can only buy or sell the shares on the BSE. Examples of stocks which can be traded only on BSE include stocks like Claris Lifesciences and Spice Jet.
When You Invest In Stocks Be More Concerned About Quality Of Stocks Rather Than Exchange
To summarize, it does not really matter whether you are investing in NSE or BSE as long as you invest in stocks which are fundamentally strong and wait patiently for them to grow and realize their true potential.