A Complete Guide on what is Nifty and Sensex: Have you ever heard of the name Dalal street or the D-Street on any market news channel or financial magazine? I’m sure, you definitely would have heard of it, if you’re even remotely involved in the finance world.
Well, Dalal Street in Mumbai, India is the address of the Bombay Stock Exchange, the biggest stock exchange in India, and several related financial firms and institutions. When the Bombay Stock Exchange was moved to this new location at the intersection of Bombay Samāchār Marg and Hammam Street, the street next to the building was renamed Dalal Street.
In Hindi Dalal means “a broker”. The term “Dalal Street” is used in the same way as “Wall Street” in the U.S., referring to the country’s major stock exchanges and overall financial system.
What is Nifty and Sensex?
In order to understand what is Nifty and Sensex, you need to understand the Indian stock exchanges first. Now, let’s discuss the two major stock exchanges in India i.e the ‘Bombay stock exchange’ and the ‘National stock exchange’ along with their indexes.
1. Bombay Stock Exchange (BSE)
- Bombay stock exchange is an Indian stock exchange located at Dalal Street, Mumbai, Maharashtra.
- It was established in 1875 and is Asia’s oldest stock exchange.
- It is the world’s fastest stock exchange, with a median trade speed of 6 microseconds.
- As of Feb 2022, 5,246 companies trading on the BSE were worth over Rs 264 Lakh Crore (Rs 26,451,334.95 Cr), as per data available on the exchange.
What is an Index? Since there are thousands of company listed on a stock exchange, hence it’s really hard to track every single stock to evaluate the market performance at a time. Therefore, a smaller sample is taken which is the representative of the whole market. This small sample is called Index and it helps in the measurement of the value of a section of the stock market. The index is computed from the prices of selected stocks.
— SENSEX
Sensex, also called BSE 30, is the market index consisting of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE).
- The 30 companies are selected on the basis of free-float market capitalization.
- These are different companies from the different sectors representing a sample of large, liquid, and representative companies.
- The base year of Sensex is 1978-79 and the base value is 100.
- It is an indicator of market movement.
- If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE has gone down. If Sensex goes up, it means that most of the major stocks in BSE went up during the given period.
For example, suppose the Sensex is 49,130 today. If Sensex drops to 48,450 tomorrow, it means that the majority of the 30 companies are not performing well i.e. their share price is falling.
— List of 30 Companies Consisting of Sensex
Here is the Sensex 30 Companies- Constituents of Sensex 30 by Weights – 2022
2. National Stock Exchange (NSE)
The National Stock Exchange (NSE) is the leading stock exchange in India, located in Mumbai, Maharashtra, India. It was started to end the monopoly of the Bombay stock exchange in the Indian market.
- NSE was established in 1992 as the first demutualized electronic exchange in the country.
- It was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system that offered an easy trading facility to investors spread across the length and breadth of the country.
- NSE has a total market capitalization of more than US$ 3.06 trillion, making it the world’s 9th-largest stock exchange as of April 2018.
- NSE’s index, the NIFTY 50, is used extensively by investors in India and around the world as a barometer of the Indian capital markets.
- The NSE remained the world’s largest derivatives exchange for the second consecutive year in 2020 in terms of the number of contracts traded.
ALSO READ
— NIFTY or Nifty 50
Nifty, also called NIFTY 50, is the market index consisting of 50 well-established and financially sound companies listed on the National Stock Exchange of India (NSE).
- The base year is taken as 1995 and the base value is set to 1000.
- Nifty is calculated using 50 large stocks that are actively traded on the NSE.
- The 50 companies are selected on the basis of free-float market capitalization.
- Here, the 50 top stocks are selected from 24 different sectors.
- Nifty is owned and managed by India Index Services and Products (IISL)
Also read: Nifty 50 fact sheet
— Nifty 50 Companies – Constituents of Nifty 50 by Weights – 2022
Quick Note: If you want to research more about the fundamentals of these companies, you can go our Stock research and analysis PORTAL here.
Nifty and Sensex Movements Meaning
Sensex and Nifty are both indicators of market movement. If the Sensex or Nifty goes up, it means that most of the stocks in India went up during the given period. With respect to NIFTY and NSE, we can say that:
- If the Nifty goes up, this means that the stock price of most of the major stocks on the NSE has gone up.
- On the other hand, if nifty goes down, this tells you that the stock price of most of the major stocks on NSE has gone down.
The same is true in the case of Sensex. Moreover, when Sensex/Nifty goes high, it shows the economic growth of the country. Else if it keeps declining, it might mean a slow-down or depression.
For example, during the Indian recession of 2008-09, the Sensex fell over 12000 points (-60%). The fall in the Sensex was analogous to the recession. Meaning, that people were selling their shares, and an economic crisis in the country.
Similarly, during the covid19 pandemic, the market crashed by over 33% within a month, which was again in relation to the deteriorating economic scenario in India and the world.
Also read:
- How to Invest in Share Market? A Beginner’s guide
- How to follow Stock Market?
- How to create your Stock Portfolio?
- How to Invest Your First Rs 1,000 in The Stock Market?
- #27 Key terms in share market that you should know
Importance of Market Index
- The market indexes are the barometer for market behavior. It gives a general idea of whether most of the stocks have gone up or gone down.
- Often, Market Index is used as a benchmark portfolio performance.
- It is used as a reflector of investors’ sentiments.
- Market indexes are used for the sorting and comparison of various companies.
- Indices act as an underlying for Index Funds, Index Futures, and Options.
- They are used in passive fund management by Index funds.
- The index can give a comparison of returns on investments in stock markets as opposed to asset classes such as gold or debt.
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That’s all. I hope this post ‘What is Nifty and Sensex?” is helpful to the readers. Please comment below if you have any doubts. Have a great day and Happy Investing!
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Nicely Explained
You are the best
Sir
Is first thirty companies of NSE are identical to BSE companies ?
Explain widely
Date of launching SENSEX and NIFTY?
The base year of Sensex is 1978-89 and the base year of Nifty is 1995.
Here the base year for sensex is 1978-79
Sir you gave us very precious info thanks
Can we transfer share from one demat account to another for free
What I found very interesting , since I invest in E.T.F.s , your explanation about the importance of a market index . All the article very clear easy to understand ! Thank you very much.
What is the use of base year and base price in sensex and nifty?
The base price is used as the indicator for the growth. For example, the base value of Sensex in 1978-79 was 100. For the next year (1980), the Sensex was 129, which means a 29% growth in that financial year.
Very clearly explained. Even a lay man can understand easily
Am 61 year old and Am wish to enter share market Pl guide me like a student. U have nicely explained the NIFYTY n SENSEX.
Thank you for the comment. Really appreciate it. Will definitely help you. Please mail me your doubts at kritesh@tradebrains.in
I am beginner please helped me to invest in the share market
Hi Shruti. Please go through this post. I’m confident it will help you out– https://www.tradebrains.in/how-to-invest-in-share-market/ Cheers!!
Are the same company shares traded in both BSE & NSE? If yes then how is it calculated for the same company prices?
Yes, the same company can be traded on both BSE and NSE. Price is decide using offer and bid.
Sir, why you stated that if the Nifty goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down.As Nifty is the Index of NSE.
Hi Sachin. You are right. Nifty is the index of NSE. It is used to reflect the movement of major stocks on NSE.
can you please tell about BSE 100 and BSE 500 and A, B , P, T , S , XD, XT group stocks. what are they and is the criteria for including this stocks in this group and index
Very nice explained…
Let me know that what is online trade business?
Nice Explained…
Is their chances to falling price for both Nifty & Sensex @ the same time.?
What Happens.
Hi Rashmi. Thanks for your comment. Generally, sensex and nifty follow the same trends. If sensex is falling, then there is high chances that the nifty points will also be falling. I hope this is useful. Regards.
Nice Explained…
Can you please share the strategy of buyback share in which condition company should to follow this strategy to buyback share?
The main reasons for buyback of share are: 1) to regain the ownership 2) Undervaluation of the stocks 3) to make the stock more attractive as buyback increases the EPS of the company.
Sir ,the thirty companies for sensex ,fifty companies for nifty are taken based on market capitalisation.
For how many days the thirty companies list in sensex will change .
Hi Mohan. If the companies continue to be a leader in their industry and they’ll be on the list. However, if they perform poorly and their market cap declines, they might be removed and new ones will replace them.
good explanation. Thanks
hi,can u please explained in simple line what is nifty.thank you.
Sir despite being Medical student was able to understand 80% but Sir not able able to get what stocks are exchanged at the stock market?
Great to hear that. I’m sure you can grasp 100% of what is explained here.
Further, all the public companies that are listed on that stock exchange are exchanged/traded in the stock market.
Explanation is upto the point. can you write an article on how to invest in stocks and shares where it is actually done?
Thanks for the comment. I have written a similar post on how to invest in stocks here.
are the 50 companies and 30 companies fixed on nse and bse resp. and i am a bfm student i.e bachelor of financial markets and i want do a masters degree in financial market..i dont have much knowledge and form where is the masters degree possible.
No, the companies in Nifty and Sensex are not fixed as they are based on market capitalization (share price * outstanding no of shares). Here, share price is dynamic. Hence, the market cap is also dynamic. Therefore, the 50 and 30 companies are not fixed in the NSE & BSE index.
thanku
So, after what duration these changes take place. As in when is do the selection of these 50 & 30 companies take place?
Great explanation! Lot of clarity in the content shared.
Thanks for the comment Anuraag.
Hi.You know warren buffet right.My doubt is,he earns around 250 to 260 crores a day in stock market.So what type of shares does he hold.I need to keep the shares for a long time.Can you please provide me the information.
Sure, everyone in investing world knows about Warren Buffett. Generally, if you’re an Indian investor, you can hold the Indian companies stocks. Mr Buffett is an ameriacan investor and he holds stocks of companies listed in US.
Excellent Explaination. It clears my doubts about sensex, nifty, NSE and BSE. Thanks !
Glad it was helpful.
Thanks kritesh ji it was very helpful, as I am student I was unaware of all these basics.
You are welcome Dinesh.
Very good Explaination,Thankyou But can’t understand how points are related to the price of stocks,i hope u help me
Hi Krishna. Sensex and nifty are just the index. They reflect the performance of the market in general. Sensex and nifty are calculated using the stock prices of top 30 or 50 companies respectively. Nevertheless, the movement in the stock price of a company is not because of the index, but due to its fundamentals and technical. I hope this is helpful.
nice and pl z give the portfolio based knowledge somthing
Hi Sunil. I have written a blog post on how to create stock portfolio here, which you can find useful.
How one can become a licensed stock broker in India.
For becoming a licensed stock broker in India, you need to register and become a member of a stock exchange. You must also register with the Securities and Exchange Board of India (SEBI). Read more here.
Hi Kritesh,
Its simple and worth.
Thanks.
Sir, what is mean by median trade speed and how it is calculated?
Median trade speed it just the trade clocking to find the response time for an executed trade. There are technical protcols to calucate the trade speed. Besides, BSE is the fastest exchange clocking a median trade speed of 6 micro seconds.
how to invest in stocks market ? and what is benifits of this /
You need a trading and demat account to getting started in stock market. There are a number of benefits of investing in stocks like high returns, secondary income source etc. You can read more here.
It was very simple to understand for the beginners. Good article
Glad it was helpful.
Very well explained in a simplified way
Hi Kritesh, I found it very easy to understand the information on stock market for beginners through your post.Still there is many things to know about the Stock Market.Will u please refer any good book in simple literature to understand the stock market.
Hi Ajay. Glad that it was helpful. Read one up on wall street by Peter Lynch.It’s a good book for basics.
Whether this book is in simple language.
Tell me the difference between Insider Buying and Share Buyback.
Yes, the book is simple to understand.
Share buybacks are similar to the idea of insider buying, except, the company will authorize the repurchase of shares. Share buybacks have the advantage of reducing the number of shares outstanding, which will increase EPS.
how are nifty and sensex calculated in numbers
I have explained how sensex is calculated here.
Hi sir..it is really good article.
Can u please tell me about the business opening and closing time.means on which time a share can be purchased and then can be sold.
Hi. Thank you for your comment. You can read about stock market timings here.
Sir
I’m study degree final year… But I don’t know what is nifty and sensex plsss help Me sir..and give me clarify about
Dear Manjunath, Please go through the article. It’s self-explanatory to learn nifty and sensex. Anyways, if you still do not understand, feel free to drop your doubts at kritesh@tradebrains.in It’s easier to explain on mail compared to the comment section.
getting basic knowledge for sahre marked
NICE CONTENT EXPLANATION FOR BEGINERS THANK YOU FOR YOUR SUPPORT TO BEGINNERS
What is the meaning of base year and base value?
The base year is taken just to carry out the comparison with the upcoming years.
Quite an impressive blog.
Awesome post. Very helpful.
You are welcome Soumojit.
Hey firstly thanku so much for ur blog u r doing osm work. But u knw as much i read more doubts occurs in my mind..for many small key words and many stuff like why company sell their shares..and many more might silly u may say ques are emerging in my mind..plz plz can u recmnd me any best book by which i can clear my all from silly to resonable doubts ?
Hi. I definitely cannot explain all these answers in a single comment. It took me to write a whole blog to explain the basics. Moreover, I have created an online video course just teach the basics to those who are interested to learn as I cannot explain the same thing again and again in person (I like helping others as long as I have time to do my work first). Feel free to check out the course here. I hope it helps.
Can this happen that one day sensex goes up and nifty comes down or the vice versa??
IF yes y and if no y??
Yes, this might happen. However, the difference won’t be much. Let’s say nifty went up +0.05% and Sensex went down -0.03%. As the index composition of nifty and Sensex are different (nifty has 50 companies and Sensex has 30), hence they might differ a little. Nevertheless, in general, they follow almost the same trend. I hope it helps.
Nifty falls as in stock price of the share of most companies listed on NSE falls and if Sensex falls as in stock price of the share of most companies listed on BSE falls…is it?
Yes!! Although, Sensex and nifty are based on major 30 and 50 constituents, however, in short, it Sensex/nifty falls then it means that most companies listed on BSE/NSE falls.
Nicely explained
Thank you sir.
I got , The intelligent investor book for myself after you suggested on reading.
Hello, I’m Completely Null about Stock Market.
Let me know Where to Get Start???
Hi. You can start here: https://www.tradebrains.in/new-to-stock-market-start-here/
Does nifty currently have 50 stocks or 51 stocks, various sites are providing different information ?
Tata Motors and Tata Motors DVR, both are included in the nifty 50. Some websites treat them as same, some as different. That’s why it differs on different sites. Read more here.
Thanks a lot
1.)free float market capitalization is aggregate of all stock exchanges or just one?like 100000 shares offered in IPO…so will they be listed 50:50 on both or separate IPO is required for listing on NSE.?
2.) apart from share price increase in near future what other vested interest is there for retail investor to invest in securities? Dividends?
1. Free float market cap consists of the total number of stocks.
2. Capital Appreciation and dividends.
Thanks for guidance ..nice information to understand
You are welcome Prafull.
Could you please clear doubts below.
1. why BSE index is always high when compared to NIFTY index, do both have different formulas ? since NIFTY has 50 stocks as sample, where as Sensex has 30 stocks (which are part of NSE stocks only) as sample.
2. Do am right, BSE is a competitor of NSE ?
1. Sensex was started way before nifty. The base year of Sensex is 1978-79 and the base value is 100. On the other hand, the base year of Nifty is taken as 1995 and the base value is set to 1000. Due to this difference, their values are different.
2. Yes, both are competitors.
Thank you very much Sir for the valuable information, Its really helps and now i know what is Nifty and Sensex. Bookmarked your site for future reference as I am beginner in Stock Market Industry.
Thanks
Sir what 21000nifty signifies ??
Very well explained and in an easiest manner. Thank you so much sharing about stock market index. It is very informative.
Read more about Nifty Trading Tips here
Glad it was helpful Mansi. I hope you have understood the concept of nifty and sensex clearly. Cheers!!
Very well explained and in an easiest manner. Thank you so much sharing about stock market index. It is very informative
You are welcome Kanika.
Thanks for brief explanation. Will you please elaborate about on which basis company cells their shares.
Thank you, Srikanth. The price of a company is based on the supply and demand. You can read more here– Why do stock prices fluctuate? I hope it helps. Cheers!
thanks for sharing this information have shared this link with others keep posting such imformation.
You are welcome, Jennine. Glad you liked the information on nifty and sensex.
why some companies are listed in both sensex and nifty?
and stock price is same or what in both stock exchange?
Nifty consists of the large 50 stocks listed on NSE and Sensex consists of large 30 companies listed on BSE. However, as the majority of companies are listed on both the stock exchanges, that’s why many companies are the same (in the list of companies in nifty and sensex). Further, the price stocks may vary a little on the stock exchanges depending on the supply and demand.
This is the best answer that I read on what is nifty and sensex. Thank you so much
Thank you, Arvind. Glad that you liked the post. Cheers!!
Very well explained.
Thank you, Dr. Shail!! Glad it was helpful.
Good information about nifty and sensex. Thank you very much.
You are welcome, Ujjwal. Glad it was helpful.
Nice article. Thanks
Thank you. Very clearly explained.
what measures nifty and sensex? and how is measure? i mean, are they measures issued either shares of companies or output(sale,production)..?. In BSE 30 and nifty how identifies index(single company) in BSE because many company in it how to find single company’s progress???
i am a mechanical engineer , I want to know about the intraday trading and how to invest them in safer side.I am new to this one
Bro your way of conveying the concept is just awesome !!!
at the same time i kindly request you to write an article about taxation rules on the stocks and mutual funds.
Hi
It was very helpful. Thanks for putting efforts in making it simpler.
Rushikesh
Thank you so much for this informative read about stock market index. Very well explained!
I am searching for this post from past few hours and glad I found it here.
Dear Kritesh
On what basis only these companies shares are selected for SENSEX AND NIFTY.
I mean Is there any parameter for selection of particulars companies shares
Nice article. Well explained
If NSE was formed to compete with BSE whats the use basically because BSE takes 30 companies into consideration and NSE takes 50 so if one falls, there’s high chance of other falling too. Then how is NSE competing with BSE as both are floating in the same boat
Well written
Thank you very much for detailed and in-depth explaining of stock exchange and related terms. It is explained in simple and lucid language which is easy to understand.
Hi sir, My name is Dev am a electronics engineer But my interest is in Stock marketing. I want to take certification in equity derivative( class-Vii) From NSE. Please guide me, what have to Read and how to prepare.
Great Stuff!
Thank you very much for detailed and in-depth explaining of the stock exchange.
Very helpful post for beginners. I was totally confused by nifty and sensex now everything is clear.
Thanks
Hello sir , please explain this last three lines , Indices act as an underlying for Index Funds, Index Futures, and Options.
They are used in passive fund management by Index funds.
The index can give a comparison of returns on investments in stock markets as opposed to asset classes such as gold or debt.
Nice post. This post helped me to learn stock market basics, Nifty, and Sensex. Please let me know for the upcoming posts.
Nicely explained bro.
Very Nice Sir..
You have explained the Very nice about Sensex and Nifty and the stock market. I Got Value from It. Thank you Sir Ji…
Awesome, you have great knowledge about the stock market, and it’s very useful for me because before reading this I had a little bit of knowledge about these things but now you teach me a lot about the stock market
nice and simple explnation
That’s much-needed information
Very helpful!! Thank you for sharing
That’s really important information. Should be read by everyone. 100% recommended.
Thanks for sharing Such a nice article related to stock market
Hello Kritesh Abhishek,
Thank you so much for sharing your knowledgeable value with us. Nicely explained the topic.
A Private Limited Company offers limited liability and legal protection to its shareholders. A Private Limited Company in India lies somewhere between a partnership firm and a widely owned public company.