Basically these are indexes which act as barometers of the stock market. In a nut shell, it tells about the performance of majority of traded stocks.
Difference between Sensex and Nifty
In India there are two major stock exchanges, Bombay Stock Exchange ( BSE) and National Stock Exchange ( NSE).
The index of the BSE is called as Sensex and the index of NSE is called as Nifty. The difference between BSE and NSE is they both are different stock exchanges.
1) Sensex – It is popularly called as BSE Sensex or BSE Sensitive Index. It is India's Oldest Stock Exchange with listing of over 4000 scripts with it. This not fully automated yet but progress towards full automation is underway. SENSEX is major index of BSE and it comprise of 30 of the largest and most actively-traded stocks on the BSE.
2) Nifty – It is popularly called as NSE Nifty. It has more than 2000 stocks from different sectors listed with it. It is fully automated electronic order processing exchange. Nifty is major index of NSE and it comprises of 50 scripts from different sectors.
The 30 stocks that are included in the Sensex, provide a sample of the entire market. To elaborate, the 30 stocks that are included are a sample. It represents the total effect of all the stocks that are listed in the BSE.
Similarly, Nifty is the representation of all the stocks listed in the NSE. It comprises of 50 shares.
The difference between Sensex and Nifty is they are different indexes which measure the performance of the stock market.
Sensex & Nifty has gone up — What does that mean
Often one comes across the news — Sensex has gone up by 100 points and Nifty has gone up by 50 points. This basically means on an average the 30 shares in BSE and 50 Shares in NSE have performed well. Individual stock prices should have increased and decreased. But majority of the stock prices in the list of 30 for BSE and 50 for NSE have increased.
Sensex & Nifty has gone down — What does that mean
Similarly another news — Sensex has gone down by 60 points and Nifty has gone down by 30 points, basically means on an average the 30 shares and 50 Shares have performed negatively. Individual stock prices should have decreased and increased. But majority of the stock prices in the list of 30 for BSE and 50 for NSE have decreased.
Other Indexes
Apart from these indexes, there are many other indexes which are used to gauge the performance of various industry stocks. For example – BSE IT or BSE Bankex shows how the IT companies and banks listed in BSE performed.
There are other stock exchanges like the Calcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE. Most of the stock trading in the country is done though the BSE & the NSE.
All these stocks in these indexes are selected through a mechanism and certain criteria. So, Sensex and Nifty are no longer a mystery now!