All Support What Is Sensex And Nifty ? Goverment – The Sensex and Nifty are both indicators of market movement. If the Sensex or Nifty go up, it means that most of the stocks in India went up during the given period.
WHAT IS SENSEX?
Companies raise capital by IPO (Initial Public Offering) and after IPO gets over, these companies get listed on the stock exchanges such as BSE, NSE. This provides a greater opportunity for the public to buy these shares for the attainment of their short or long term goals.
Sensex is a combination of sensitive and index and it was introduced in 1986. It is the benchmark index of BSE and consists of 30 companies that are listed on BSE.
Sensex, in simple words, is the combined value of stocks of 30 specific companies listed on Bombay stock exchange (BSE). BSE can revise this list of 30 over the time. So, if Sensex fluctuates, it shows on the economy as well. For example, if Sensex goes up people become more intrigued in buying stocks because they believe that economy is going to grow. But, if Sensex goes down, people tend to stop investing in economy.
Let us take it with the help of an example, it is like trying to determine the ‘intelligence’ of a class of 500+ students across various courses by taking the average marks of Top 30 students. Most of the time, the overall performance of the class can be determined by looking at the average of Top 30 students, but this may not necessarily be so. This does not mean comparing the average is anywhere wrong. In fact, it is even better to compare the averages across a period of time, or across classes as it is more helpful rather than looking at the average as a stand-alone factor.
WHAT IS NIFTY?
Nifty is derived from the term National Stock Exchange Fifty and it comprises of 50 companies that are traded on NSE. It is the benchmark index of NSE and was introduced in 1996.
NIFTY is abbreviated form for National Fifty. This is an index on fifty shares listed on the National Stock Exchange of India. It covers 50 stocks from different sectors of the Indian economy. So, this is commonly referred to as NIFTY 50 also. When you buy Nifty future, it means you have invested in 50 company’s shares which, collectively, are representing Nifty Index. It is basically automatic diversification of your investment in 50 stocks.
NIFTY is abbreviated form for National Fifty. This is an index on fifty shares listed on the National Stock Exchange of India. It covers 50 stocks from different sectors of the Indian economy. So, this is commonly referred to as NIFTY 50 also. When you buy Nifty future, it means you have invested in 50 company’s shares which, collectively, are representing Nifty Index. It is basically automatic diversification of your investment in 50 stocks.
In simpler words, let us take it with the help of an example. It is just like the fuel indicator of your car. When the fuel Indicator is in the Red zone, you understand that your fuel tank is about to be empty and you need to refill it or else your car will stop running. In the same way, when you are filling up your tank and the Indicator turns full in Green zone, you understand your tank is full and you should stop filling it or else it will spill out of the tank. Likewise, Nifty Index constitutes of 50 companies which are considered to be the nation’s economy movers and shakers. Each of the 50 company contributes some weightage to the Nifty Index and its fall and rise indicates the condition of our economy.
KEY DIFFERENCES BETWEEN SENSEX AND NIFTY
- National Fifty is considered as NIFTY while the Sensitive Index is considered as SENSEX.
- Nifty is related to NSE (National Stock Exchange) whereas Sensex is related to BSE (Bombay Stock Exchange).
- Nifty is the indicator of top companies heavily traded on NSE while the Sensex is the indicator of top companies heavily traded on BSE.
- The Sensex is older than Nifty (Sensex was found in 1986 whereas Nifty was found in 1995).
- The major difference between Nifty and Sensex is that 50 companies are indexed in Nifty while 30 companies are indexed in Sensex.
Difference Between Sensex and Nifty:
In the stock world, Sensex and Nifty are the commonest terms that draw attention daily. You would have come across news like Nifty hits all-time high, Sensex crashes and so on. As investors, we should be aware of these indices and their importance. The movement of Sensex/Nifty is in accordance with the movement of stocks present in the index. There are so many factors that could influence the movement of stocks and in turn the index. For example, when there is an election result or when there is an escalation of trade war or when there is an announcement of a rate cut, Sensex and Nifty either surge or plummet. These simply indicate the investors’ sentiment. Nifty and Sensex are the barometers of the Indian economy. The markets’ good health simply means the investment culture in a country is in good condition. Let us know what the difference between sensex is and nifty.
There are thousands of listed companies in India. And, it is not at all easy to track every single stock. So, a market index plays a very important role here. Therefore, a market index is calculated which acts as a representative of the whole market. Hence, Sensex and Nifty are the two important indicators which are used to measure the behavior of the market. These market indices are known as a standard for portfolio performance. SENSEX (Sensitive Index) and NIFTY (Net Index of Fifty) are the benchmark index of India..