Last Updated on December 22, 2021 by admin
What is Sensex And Nifty – Stock Market Guide For Beginners
Sensex and Nifty are Stock Market indices which represent Bombay Stock exchange & National Stock Exchange. What is Sensex and Nifty. How to Invest?
Read Also : Best Trading App in India.
What is Sensex and Nifty ? Sensex & Nifty are the benchmark indices of BSE and NSE Respectively. There are thousands of listed companies in India. And, tracking every single stock is not easy. Therefore, the market index plays a very important role here. Therefore, a market index is calculated that acts as a representative of the entire market.
So, the SENSEX and the NIFTY are two important indicators that are used to measure market behavior. These market indices are known as a benchmark for portfolio performance. SENSEX (Sensitive Index) and NIFTY ( National Stock Exchange Fifty ) are the benchmark indices of India. Today, in this article, we will tell you what are the Sensex and Nifty, and how they work. So read the article till the end.
If you want to make money from Share market then Learn How to invest in stock market. Then open a Free DEMAT Account on UPSTOX PRO. Click Here to, Open A Free UPSTOX PRO Account.
And Use Referral Code, HJ3700 To get referral Sign Up Bonus. It’s mandatory to use the referral code. After this you can also refer and earn from UPSTOX Referral.
You might like to read, How To Earn Money Online Without Investment At Home.
What is Sensex and Nifty:
Friends, today we will talk about What is Nifty and Sensex. You will often hear or read in the news or in the news paper that the Sensex and Nifty went down or closed up. Then maybe Many people will be wondering what is Sensex and Nifty. So today we will try to tell you in easy language what is the effect of Sensex and Nifty on the stock market.
You can also read : Sensex Full Form & What is Sensex?
What is Sensex : Sensex Full Form
First of all, about Sensex, what is the Sensex? So as you may be aware that the two major stock exchanges of the stock market are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). In this, we call BSE Sensitive Index. Is the standard form. The BSE can be calculated by looking at the position of the SENSEX.
The Sensex holds the shares of 30 leading BSE companies and the direction of the BSE is determined on the basis of the shares of these 30 companies. If the stock of these 30 companies declines, it is believed that the BSE closed today with down. And if the stock of these 30 companies continues to rise, then it is believed that the BSE closed today with high.
In fact, the shares of more than 5000 companies are listed in BSE. It is almost impossible to track the shares of all these companies, that’s why the Sensex Index was created. The word SENSEX has been coined by combining Sens with the word SINSITIVE and Ex with the word INDEX. In the Sensex, the top 30 companies of the BSE hold shares and keep changing according to their performance.
If a company’s stock continues to perform poorly, then it is excluded from the Sensex and replaced by another company of the BSE. The stock is given a place. Read continue What is Sensex and Nifty.
Sensex Meaning
The SENSEX is, in simple terms, the combined value of the shares of 30 specific companies listed on the Bombay Stock Exchange (BSE). BSE can modify this list of 30 over time. Therefore, if the Sensex fluctuates, it also shows the effect on the economy. For example, if the Sensex goes up then people become more ingrained in buying shares because they believe the economy is going to grow. But, if the Sensex goes down, people stop investing in the economy.
What is Nifty
As we have already mentioned that the two major stock exchanges of the stock market are NSE and BSE. Out of which SENSEX is the major sensitive index of BSE. And now we will talk about Nifty, then Nifty is the main index of NSE (National Stock Exchange of India). Friends, the shares of more than 1600 companies are listed in the NSE.
So it is impossible to track the shares of each company. That is why, out of all the companies listed in the NSE, an index has been created by combining the shares of the 50 best companies, which we call Nifty.
Stock Market Investment Strategies
Nifty 50 : Meaning of Nifty 50
NIFTY consists of shares of 50 companies of NSE. Hence the average price of shares of these 50 companies is determined by mixing the movement of NIFTY. And the direction of NSE is determined by considering the movement of NIFTY as the basis.
If the Nifty closes down then it is believed that the NSE closed down and if the Nifty closes up then it is assumed that the NSE closed up. The term Nifty is formed by combining NATIONAL and FIFTY. Fifty because it includes stock of 50 companies.
Nifty is an abbreviation for National Fifty. It is an index of fifty stocks listed on the National Stock Exchange of India. It covers 50 stocks from various sectors of the Indian economy. So, it is also commonly called NIFTY 50.
When you buy a Nifty future, it means that you have invested in 50 company shares. Which are collectively representing the Nifty index. It is basically an automatic diversification of your investment into 50 shares. Now you understand What is Sensex and Nifty.
Why are Market Values Important ?
Imagine a basket full of fruits – Apples, Pineapple, bananas, oranges. The basket components- apples, bananas and oranges are traded in the markets every day and their prices fluctuate. Therefore, their prices increase due to demand and supply imbalances. So, the value of the fruit basket is the sum of the weight of each ingredient which is many times more than its price.
Now, if instead, you have a basket of select US stocks, the value of the basket will be the weighted average of the value of all the shares. Therefore, the rise and fall in an index reflects the overall performance of all these companies, and in turn is representative of the entire market. It is a barometer of economy. The index can be constructed to track the performance of Shares, stocks, bonds, currencies, volatility, prices.
You might also like to read, How To Earn Money Online Without Investment At Home.
What is Sensex and Nifty
So friends, you must have understood what is Nifty and Sensex. Now we can say that the movement of the stock market can be found by looking at the movement of Nifty and Sensex. Just as a person can be found out about the health of a person by looking at the blood report. In the same way the health of the entire stock market can be found by looking at the Nifty and Sensex.
If the Nifty and the Sensex close in the green mark, then we assume that today the stock market has closed above its yesterday. And if the Nifty and the Sensex close in the red mark, then we assume that the stock market tomorrow Closed below. All the Sensex and Nifty stocks are from different sectors, which covers almost all the sectors of the stock market.
Apart from the Sensex and the Nifty, there is a different index to measure different sectors in the stock market. For example, if you have to measure only the banking sector. Then you can also know the condition of the bank sector by looking at the index score of BSE banking or NSE bank Nifty.
Read also : How to Earn Money in Share Market Daily
Difference between Sensex and Nifty
What is the difference between SENSEX and NIFTY?
- The SENSEX started in 1986. While the Nifty started in 1994.
- The SENSEX is the index of the Bombay (Mumbai) Stock Exchange. While the Nifty is the index of the National Stock Exchange.
- And The SENSEX consists of 30 companies. While the Nifty consists of 50 companies.
- Sensex’s base year is 1978-79. While Nifty’s base year is 1995.
- Sensex has a base value of 100. While Nifty has a base value of 1000.
- Sensex and Nifty indicates 2 big stocks exchange in India.
Is Sensex Better Than Nifty ?
Yes , If you compare only data then Sensex performances is better then Nifty. So one can say that Sensex is better.
What are the similarities between Sensex and Nifty ?
- Both the Sensex and the Nifty are calculated on the basis of weighted average market capitalization.
- It covers major companies in various sectors of the Indian economy.
- Sensex and Nifty are both indices.
- Both belong to a stock exchange.
- Both are located in Mumbai.
Conclusion :
Both the Sensex and the Nifty are stock exchange indexes that determine stock market performance. In simple words, they are clear indicators of market movement. Therefore, you get a clear idea whether most of the major stocks have gone up or down. Therefore, when the Nifty and the Sensex go up. You see an instant happiness wave in the stock market.
You see a quick pace and excitement in stock trading activities, don’t you! Apart from this, an increase in the market index is also seen in the direction of economic development of the country. If you have any Question regarding this You can comment below. Like & share the post if you think it’s valuable.
So this is form us today about,
Details explanation What is Sensex and Nifty.
Thank You.