The Indian stock market is primarily represented by two major benchmark indices: Sensex and Nifty. These indices provide a snapshot of the market’s performance and are widely followed by investors, analysts, and financial experts.
What is Sensex?
Sensex, short for Stock Exchange Sensitive Index, is the benchmark index of the Bombay Stock Exchange (BSE). Introduced in 1986, it comprises 30 top companies listed on the BSE, representing various sectors. The Sensex is calculated using the free-float market capitalization method, which considers the proportion of shares that can be readily traded in the market.¹
What is Nifty?
Nifty, short for National Stock Exchange Fifty, is the benchmark index of the National Stock Exchange (NSE). Launched in 1996, it consists of 50 leading companies listed on the NSE, representing a broader range of sectors. Like Sensex, Nifty is also calculated using the free-float market capitalization method.
Key Differences between Sensex and Nifty
– Composition: Sensex comprises 30 companies, while Nifty consists of 50 companies.
– Exchange: Sensex is associated with the BSE, while Nifty is associated with the NSE.
– Sector Representation: Sensex represents a narrower range of sectors, while Nifty represents a broader range of sectors.
Significance of Sensex and Nifty
Both Sensex and Nifty are crucial indicators of the Indian stock market’s health, tracking the performance of specific sets of stocks. They play a pivotal role in helping investors gauge market trends and make informed decisions.
Recently, the Sensex and Nifty have shown positive trends, with the Sensex climbing over 300 points and the Nifty 50 ending above 25,200. The market’s performance is attributed to easing global tensions, renewed confidence in the upcoming trade deal between the US and India, and strong buying interest from foreign institutional investors.
Understanding Sensex and Nifty: Key Benchmarks of the Indian Stock Market
