Although there are numerous stock exchanges in the Indian market, suit many investors choose the Bombay Stock Exchange (BSE) for investing and trading. The bse, with over 5,000 listed companies making it the single largest stock exchange in the world, has been operational since 1875. This blog attempted to identify the possible reasons why individual investors may consider accessing the BSE.

A wide range of choices of the listed companies

The BSE is a market which offers a wider range of stocks out of all the stock exchanges that exist in India. The BSE is the trading platform of choice for most investors who want to invest in Indian equities since it provides information on all the companies that are listed with more than 5800 companies from all segments and market capitalization. Therefore regardless of whether an investor is interested in blue chip large-cap stocks.

High liquidity is the most descriptive attribute

This is in light of the fact that the trading volumes in BSE is rather high, making there be a lot of liquidity for the investors. Liquidity implies the level of ease to which the invested equities can be sold and exchanged for cash by investors. BSE has been the busiest exchange in the world by sheer number of transactions facilitating hundreds of thousands of trades daily. This is because there is a high liquidity, meaning that the size of the market means that one can easily buy or sell without affecting the market much. 

Reduction in impact cost

Impact costs are those changes in price that result from trading activity. When it comes to percentage impact cost for the individual traders trading in small volumes, BSE is less costly as it has the ability to handle the trading volumes without making the prices go round in unnecessary rounds. Hence, movements in markets due to individuals buying or selling are generally less often, enabling traders to execute trades more effectively at desired price points. The elimination of impact cost means that investors can make profits from price changes which are associated with fundamentals and not technical as well as liquidity features.

Participate in IPOs and primary share 

Furthermore, as one of the major market destinations for secondary trading, BSE also allows individual investors to participate in IPOs and primary share issues through the BSE IPO. By this, investors can apply for share issues of companies that are floated to the public for sale of its share before it is quoted in the market. BSE is primarily present in over 16,000 dealers and terminals in India, which are helpful for investors who are not located in Mumbai. The allocation process has also been a little more transparent in the recent past than in the past in the past. In particular for those investors who want to invest in companies early in their growth narratives, the primary issuance through offer price provides a shot at gaining from listing gains.

Familiarity and trust

It is a very risky proposition that involves trust between the investor and other market players who are in the middle of these transactions. Stock exchange has been established since 1875, but the BSE in particular has developed good reputation among investors in India. It was able to change from an open outcry trading floor for an all India electronic platform through the BOLT system since 1995 without any major hiccups. It has also been able to retain this reputation though there has been intermittent check like the IPO scam and some brokers’ defaults. Due to the kind of person that the individual investor is, the operational nature of the market together with its durability, credibility and legal recognition makes BSE a secure place for investing ones’ saved up money.

Conclusion

Although the National Stock Exchange or nse also provides similar products like index ETFs and currency pairs to the competing retail brokerage houses and other investment services, the majority of the individual investors invest in the BSE as it is more familiar to them. To purchase stocks and avail the growth opportunities on the BSE trading platforms for wealth creation, open a trading and demat account with a reputed brokerage like 5paisa.