Where should you sell equity shares? This question often comes to traders’ minds. Which exchange should be chosen and why? And what considerations need to be made when you sell your equity shares on the open market? All of the solutions are provided in this post for you today.
Understanding BSE & NSE
Before selling your equities in the share market, you must understand the BSE and NSE. You must know their liquidity, ranking, listed companies, etc.
SEBI regulates both BSE and NSE.NSE holds the eighth position globally in the stock exchange. It is India’s largest stock exchange by trading volume, surpassing BSE in this aspect. With approximately 1,600 listed companies, many of which overlap with BSE listings, it represents 50 large, extremely liquid stocks.
Meanwhile, the BSE ranks tenth globally among stock exchanges. It consists of 5,000+ listed companies, and its benchmark index, S&P BSE Sensex, comprises 30 of the biggest and most traded stocks.
Similarities Between BSE & NSE
- Both exchanges are popular among investors.
- Both allow stock trading.
- Both exchanges have electronic trading stocks facilities.
- Both headquarters are in Mumbai.
Price Efficiency
Higher trading volumes and frequent buyer-seller exchanges on the NSE lead to improved pricing performance and a more precise estimate of the true market value of stocks. For instance, due to the volume of trades on the NSE, a prominent company’s stock can be swiftly determined at its fair price.
On the other hand, while BSE also provides reliable price discovery, its slightly lower trading volume may lead to less precise pricing compared to NSE. This can result in minor discrepancies in stock prices, making them less reflective of their true market value. For example, a slightly different price for the same company’s stock may appear on BSE since fewer trades occur there.
Technological Progress
NSE is well-known for its modern electronic trading system. It was the first in India to use a fully automated, screen-based system, which made trading faster and clearer. While BSE has also improved its technology, NSE’s early start with electronic trading gives it an advantage in speed and efficiency.
Investors and financial managers frequently use the Nifty 50 index on the NSE as a popular benchmark to assess market performance. It provides a clear picture of the market’s state and is frequently watched. Similarly, the Indian stock market’s performance is gauged by the widely recognized BSE Sensex. The Sensex’s lengthy history allows it to offer insightful information about market performance and trends.
Trading Costs
Because of the increased trading volumes and broker competition on the NSE, trading expenses, including brokerage fees, are cheaper. Brokerage fees can be higher on the BSE, although this can vary based on the broker and the particular trading plan that the investor selects. On the NSE, the transaction charges are 0.0035% on turnover for equity delivery. On the BSE, the transaction charges are 0.00375% on the turnover value of buying.
Conclusion
The above points give you some clarity on where you should sell your equity shares. NSE exceeds BSE in some aspects, but every trader has a different financial plan for selling their shares. You may use Samco’s analysis to make your decision accordingly.
