If you have grown an interest in the Stock Market recently, you may have come across the terms “Sensex” and “NIfty”. Now, if you are wondering about what are Sensex and Nifty, you have come in the right place. Because here in this article we are discussing both the terms quite elaborately.
Sensex and Nifty are two indices of a stock market. Sensex indicates about all the companies listed on the Bombay Stock Exchange (BSE), whereas Nifty indicates about the major companies listed on the National Stock Exchange (BSE). The former is located in Mumbai and the latter is located in Delhi.
What is Sensex?
Sensitive Index is the stock market indicator for the Bombay Stock Exchange. It was first started in 1986 and it is usually based on the market stock index of 30 companies and their financial performance. The large, established companies from various industrial sectors such as IT, Banks, FMCG, Capital goods, etc are part of this.
How is Sensex Calculated?
From September 1, 2003, a new method of calculating Sensex comes into existence and the name of it is ‘Free-Float Method”. The level meter of Sensex directly indicates about the performance of 30 stocks in the market. The Free Float Methods Usually manages the proportion of the shares that can be readily traded in the market.
What is Nifty?
It is an indicator of the National Stock Exchange (NSE). It is usually a collection of 50 stocks but stock 51 is also listed in this stock exchange. People also call it as Nifty 50 or CNX Nifty because India Index Services and Products Ltd. (IISL) owns and manages it.
How Nifty is Calculated?
It is also calculated by the “Free Flow Method”. As similar to Sensex, it also follows a mathematical formula in order to know market capitalizations. To calculate the market Capitalization, equity capital is multiplied by a price. Further, it is multiplied with IWF. IWF is the determining factor for the number of shares available for trading in the market freely.
You finally know the definition of both Sensex and Nifty. Now, let’s find out the differences between them.
Differences Between Sensex and Nifty
There are plenty of differences between Sensex and Nifty, and they are listed below:
1. Derived from
The name Nifty is extracted from the word National Fifty. Whereas the name Sensex comes from Sensitive Index. The other name of it is &P CNX Nifty. Whereas the other name of Sensex is S&P BSE Sensex.
2. First Started
Nifty was first started in 1996 and the month was April 21. Whereas Sensex comes into existence after 7 years later and the date was September 1, 2003.
3. Operated By
India Index Services and Products operates Nifty. It is the subsidiary of National Stock Exchange of India (NSE). Whereas Bombay Stock Exchange operates Sensitive Index.
4. Stocks they can Hold
Bombay Stock exchange can hold 3o company’s stocks whereas the National Stock Exchange can hold 50 company’s stocks.
5. Number of Sectors Covers
National Stock Exchange covers more than 24 sectors of companies as it holds stock of more companies than the Bombay Stock Exchange. Whereas Bombay Stock Exchange covers just 13 sectors as it holds the share of fewer companies than the National Stock Exchange.
6. Located at
Bombay Stock Exchange is located at Dalal Street, Mumbai. Whereas, National Stock Exchange is located at Exchange Plaza, Bandra Kurla Complex, Mumbai.
To sum up, finally, you have learnt all the basics related to NIFTY and SENSEX. They are stock market indices ( plural of the index) used to determine the value and strength of the stock market. People usually trade more in National Stock Exchange as many stocks are listed in it as compared to the Bombay Stock Exchange. However, the target of both of them is large-cap stocks. And the performance of both of them over the years is also quite similar to each other. So, if you want to invest money in stocks, you can have a look at both of them.
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