NSE vs BSE: Which is the Best for Long-Term Investments?

How to create wealth directly with the stock market the basic strategy is to invest in good companies and forget for a long time. While you gear up for the stock market trading, you may get one question in your mind: “Which is Better for Long-term Investments, NSE or BSE?”

NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are the two major stock exchanges of India. Even though the two may look similar on face, there are nuances which can impact your investment journey for years or even decades.

But in this guide by CoinDCX News, we breakdown how each exchange works, what are their differentiators and which one could be best suited for long-term investors.

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A Quick Overview of NSE and BSE

BSE – Bombay Stock Exchange

• Founded: 1875
  
• Headquarters: Mumbai, India
  
• Index: Sensex (30 top-performing companies)
  
• Claim to Fame: Asia’s oldest stock exchange.
  

BSE has been a treasure trove for one of the successful companies in Financial history of India.

NSE – National Stock Exchange

• Founded: 1992
  
• Headquarters: Mumbai, India
  
• Index: Nifty 50 (50 leading companies across sectors)
  
• Claim to Fame: First exchange in India to offer fully automated electronic trading.
  

The NSE is the exchange of choice for active traders and institutional investors due to its competitve market structure with high trading volumes and technological superiority.

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NSE or BSE – The Core Differences

Feature	NSE	BSE
Year Established	1992	1875
Benchmark Index	Nifty 50	Sensex
Number of Listed Companies	~1,900	~5,300
Liquidity	Higher	Moderate
Preferred By	Active traders, derivatives investors	Long-term equity investors
Technology	Fully automated since inception	Modernised trading systems over time

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Liquidity and Long-Term Investing

When deciding between NSE or BSE, liquidity often comes up.

• NSE: Higher trading volumes mean easier buying and selling at market prices.
  
• BSE: While liquidity for blue-chip stocks is strong, lesser-known companies might trade less actively.
  

That is, individual day-to-day liquidity matters less to long-term investors than whether the exchange generally lists companies a longer-term investor will want to own.

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Range of Companies – NSE or BSE?

If your focus is long-term investing, access to a broad variety of companies is essential.

• BSE lists over 5,300 companies, including many small-cap and mid-cap firms. This is a big advantage for investors looking for hidden gems.
  
• NSE lists fewer companies (~1,900) but covers almost all major large-cap and mid-cap companies.
  

CoinDCX News Tip: If your portfolio leans towards large-cap stability, NSE or BSE won’t make much difference. But for small-cap hunting, BSE has more options.

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Index Funds & ETFs

If you are more into long-term investing via index funds or ETFs, both NSE or BSE offers similar products.

• Nifty 50 (NSE) and Sensex (BSE) index funds have delivered similar long-term returns.
  
• NSE dominates in ETF liquidity, making it easier to buy and sell at fair prices.
  

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Dividends and Long-Term Holdings

Dividends are paid out by the companies themselves not by the exchange, BSE or NSE do you choose. However:

• Both exchanges handle dividend announcements and corporate actions efficiently.
  
• The choice of exchange won’t impact the amount of dividend you receive.
  

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Which Has Better Long-Term Returns – NSE or BSE?

Broadly, both exchanges have been similar in terms of return generation by same companies in history. This is because if a stock is listed on the two exchanges, its price movement are almost equal due to arbitrage opportunities.

The only catch is the type of companies listed in one exchange exclusively — for almost all large cap long-term stocks, you can buy them on NSE and BSE.

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Pros and Cons for Long-Term Investors

Pros of NSE:

• High liquidity for most major stocks.
  
• Strong presence in index-based investing.
  
• Efficient trading system and price discovery.
  

Cons of NSE:

• Fewer listed companies compared to BSE.
  

Pros of BSE:

• Largest number of listed companies.
  
• Long history and credibility.
  
• Good for exploring small-cap opportunities.
  

Cons of BSE:

• Lower liquidity for lesser-known stocks.
  

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So, NSE or BSE for Long-Term Investments?

If you are more into long-term investing via index funds or ETFs, both NSE or BSE offers similar products.

However:

• Choose NSE if you want higher liquidity and more active trading in your portfolio.
  
• Choose BSE if you want access to a wider range of small-cap and mid-cap companies.
  

Many seasoned investors simply have accounts that allow them to trade on both exchanges — giving them maximum flexibility.

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Final Thoughts

The choice between NSE or BSE for long-term investments is less about which is “better” overall and more about your investing style.

• If you stick to blue-chip companies and ETFs, NSE might feel smoother due to liquidity.
  
• If you enjoy researching and investing in smaller, potentially high-growth companies, BSE’s vast listings give you more opportunities.
  

Either way, the most important factor is choosing the right companies and holding them patiently — the exchange is just the marketplace.

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FAQs on NSE vs BSE for Long-Term Investments