How inter-exchange arbitrage works for retail traders on NSE and BSE: Zerodha’s Nithin Kamath explains

Zerodha founder Nithin Kamath has highlighted a lesser-known feature that can help traders tap into arbitrage opportunities between the NSE and the BSE without added complexity or capital blockage.In a post on The feature works for both intraday trades and delivery positions, offering flexibility in different trading styles.

“A feature that many people are not aware of. You can buy a stock for intraday on NSE and sell it on BSE (or vice versa) to take advantage of arbitrage opportunities if you see any. Just select the exit exchange on your position page. The margins are released immediately. And it can be done whether you trade for intraday or hold a stock,” said Kamath.

A key benefit, Kamath noted, is that margins are released immediately upon exit, making the strategy capital efficient for traders who notice short-lived price differences between the two exchanges. Such arbitrage opportunities generally arise due to temporary supply-demand imbalances, liquidity differences or order flow mismatches between the NSE and the BSE.

While arbitrage between exchanges has traditionally been associated with institutional traders or high-frequency desks, Kamath’s post highlights how retailers can now access the same mechanism, provided they are fast, disciplined and take transaction costs into account.

The founder of Zerodha is quite frequent on X and gives tips to his followers. Recently, he issued a stark warning to retail investors, who are caught up in the speculative FOMO (fear of missing out) that has gripped India’s unlisted market. In a post onNoting the steep valuations assigned to many IPO-bound companies, Kamath said these stocks trade at a 100-500% premium, and many recent listings have been big disappointments.

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