When one just starts to explore stock markets, his first question is obviously, how to determine which stocks to buy? Moneyvidya can help you in choosing that of course, with day trading tips, positional tips and long term investment picks on BSE as well as NSE.

You always also have this second question in mind. Why there are 2 exchanges in India? Why there are 2 indexes (Sensex & Nifty)? Does it really matter? Why should someone trade in one place, or the other?.

Let’s see the differences and similarities in them.

1. What is BSE? – BSE is a very old stock exchange, founded in 1875

2. What is NSE? – NSE is relatively new to the game, founded in 1994

3. NSE has a more sophisticated technology, being the newer entrant

4. BSE has more number of stocks listed (World no – 1, around 8000 companies listed) and more total market cap than NSE.

5. BSE has to be your exchange of choice if you want to deal a lot in small caps.

6. Volume of shares (liquidity) is much more on NSE, than BSE.

7. If derivatives is your area of interest, you can’t rely on BSE. Practically, NSE is the only player in derivatives.

8. BSE has the famous primary index, Sensex, formed by top 30 shares.

9. What is Nifty? – Nifty is the primary index of NSE – weighted avg. of 50 blue chip shares, formed in 1995

10. Even though Nifty has more companies than Sensex, their movements are almost always correlated.

11. Index funds mostly track themselves against Nifty, as NSE has more volumes

12. Overall, BSE is losing ground. They recently slashed their membership fees to Rs. 10 lakh from 1 crore, in order to gain some ground.

13. You can use the difference in quotes to buy at one exchange and sell at the other quickly, to make small amounts. This is called “Arbitrage Trading”.

Where should I trade? If you want to play in small cap stocks, BSE offers much more opportunity. For all other purposes, like regular retail investment, and also derivative trading, NSE is the place to trade.

For a retail investor, it does not matter much. In general, the thumb rule for cash segment (regular delivery trades) is you check if the stock is listed at NSE, if yes, buy it on NSE, else buy on BSE. The minor difference in quote won’t matter for most practical purposes. The quote that you see in your trading platform, and the actual price that you get delivery for, might be slightly different, especially for low volume mid cap stocks. What matter more, is what stocks you buy!

Moneyvidya.com is an Indian website that helps you choose the best stocks to buy. It is done by tracking the performance of all the stock tips on several parameters like profits and consistency.