Sensex and Nifty – Foundations
In this decade, the words Sensex and Nifty are added to the family vocabulary. These terms will be encountered at least once a day. The news channel also keeps these words on its sidebar and scrolling on. This has also become an important part of any news broadcast. "Sensex and Nifty literacy" has now become very important. So what is Sensex? What is Nifty? Basically, these are the barometers for the stock market. In the nut shell, it describes the performance of most traded stocks.
There are two major stock exchanges in India, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE index is called Sensex, and the index of the NSE is called Nifty. The difference between bse and nse is that they are different stock exchanges.
1) Sensex – It is commonly referred to as BSE Sensex or BSE sensitive index. It includes 30 stocks listed on BSE.
2) Pretty – It is called NSE Nifty. It includes 50 stocks listed on the NSE.
The 30 stocks included in Sensex provide a sample of the entire market. In detail, the included 30 stocks are a sample. It represents the overall effect of all the stocks listed in the BSE.
Similarly, Nifty is a representation of all the stocks listed in the NSE. It consists of 50 shares.
The difference between Sensex and Nifty is that they are different indices of stock market performance.
Sensex has risen – what does it mean
Often people have encountered news – Sensex has gone up 100 points and Nifty has gone up 50 points. This basically means that an average of 30% of the BSE shares and 50% of the NSE stocks performed well. Individual stock prices should increase and decrease. But most of the stock price increases at 30 BSE and 50 NSE listings.
Similarly, another news – Sensex down 60 points, Nifty down 30 points, basically means an average of 30 shares and 50 shares of negative performance. Individual stock prices should fall and rise. But the majority of stock prices fell in 30 BSE and 50 NSE lists.
In addition to these indices, there are many other indices used to measure the performance of stocks in various sectors. For example – BSE IT or BSE Bankex shows how IT companies and banks listed on BSE are performing.
All these stocks in these indices are selected through a mechanism and certain criteria. So, Sensex and Nifty are no longer a mystery now!