Nifty and Sensex are important and are used by traders daily in the stock markets. They enable you to determine market trends and are referred to as stock indices.
What is a stock index?
To know the market trends, experts do not calculate the performance of every listed stock. Instead, they use an index that involves a sample of listed companies from various industries and acts as a representative. The two major indices in India include Nifty and Sensex. Sensex or S&P BSE Sensex is the benchmark index of the Bombay Stock Exchange. Nifty is the benchmark index of the National Stock exchange.
Differences
Here are some key differences between the two indices:
- Sensex is derived from a combination of two words i.e., sensitive and index, and the term was introduced by an Indian stock market analyst named Deepak Mohoni. Nifty or NSE Fifty is derived from the union of the world ‘national’ and ‘fifty’. Nifty is also called Nifty 50 or CNX Nifty by traders.
- Sensex is the oldest stock index in India, having been introduced in 1986. Nifty was introduced in 1996 and is a relatively newer stock index than Sensex.
- Sensex includes the top 30 companies listed on the BSE that span a range of industries and sectors. Nifty includes the top 50 companies spread across several industries and sectors and listed on the NSE.
- The base value used for the calculation of Sensex is 100. While the base value utilised for calculations of Nifty is 1,000.
- Sensex includes companies that span as many as 13 different sectors of the economy. Nifty is broader than Sensex and features various companies from across 24 individual sectors.
- The base year used for the calculations of BSE Sensex is 1978-1979. The base year used for Nifty calculations is 1995.
- Nifty is owned and operated by Index and Services and Products Limited which is a subsidiary of NSE India. BSE, the largest trading platform, owns Sensex.
- The base capital for Sensex does not exist but for Nifty it is Rs. 2.06 trillion.
- Both target large-cap stocks. However, Nifty is relatively broader than Sensex, as it has higher large-cap stocks listed on it.
Importance
Being indices, Sensex and Nifty have companies from several major industries and sectors and are regarded as the best indicators of the performance of the Indian economy. So, like you track the Adani Power share price online to see how it performs, you can do so for Sensex and Nifty too. This allows you to determine how the share market is performing on a particular day and analyse if it is a good time to invest.
