What is Nifty and Sensex? – Beginner's Guide to Indian Stock Market Indices
Introduction
If you're new to the Indian stock market, two terms you'll hear often are Nifty and Sensex. But what exactly are they? How do they affect your investments? In this beginner-friendly guide, we'll break it all down.
What is a Stock Market Index?
A stock market index is a group of selected stocks that represent the overall market or a part of the market. It helps investors understand market trends and performance in a simplified way.
What is Nifty 50?
Nifty 50 is the benchmark index of the National Stock Exchange (NSE). It represents the top 50 companies listed on NSE across 14 sectors of the Indian economy.
- Launched in 1996 by NSE Indices Limited
- Tracks performance of large-cap companies
- Updated every 6 months
How is Nifty Calculated?
Nifty uses a free-float market capitalization-weighted method. That means companies with a higher market value have more influence on the index.
Top Companies in Nifty 50
- Reliance Industries
- Infosys
- HDFC Bank
- ICICI Bank
- TCS
What is Sensex?
Sensex stands for the Sensitive Index and is the benchmark index of the Bombay Stock Exchange (BSE). It includes 30 of the largest and most actively traded companies on the BSE.
How is Sensex Calculated?
Like Nifty, Sensex also uses the free-float market capitalization method. It reflects the health of the Indian economy through its 30 key stocks.
Why Are These Indices Important?
- They indicate the overall performance of the stock market.
- Used as benchmarks for mutual funds and portfolios.
- Guide for retail and institutional investors.
Historical Performance
Both indices have shown long-term growth. While short-term fluctuations are common, over decades, Nifty and Sensex have consistently moved upwards reflecting India's economic progress.
How to Track Nifty and Sensex Live?
You can view live charts on NSE, BSE websites or through stock market apps like Moneycontrol, Zerodha Kite, Groww, and TradingView.
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