This paper presents a comparative study of two sensitivity based methods, namely loss sensitivity method and bus sensitivity method, for the optimal capacitor placement problem. The sizing of capacitors is done using the particle swarm optimization (PSO). The performance of these two methods is compared on the basis of the active losses and voltage profile of the bus systems after optimal capacitor placement. The methods have been implemented on IEEE 9-bus and IEEE 69-bus radial distribution systems. The results obtained clearly indicate that bus sensitivity method based capacitor placement gives better results in comparison to the loss sensitivity method.