What is Stock Index, Nifty and Sensex Indices?
What is an Index?
The statistical aggregate that measures change, such as market performance or price movement is the index. Based on specific market characteristics, market indices calculate or measure the value of a portfolio of holdings, and investors use the market indices to compare performance, and use them as the basis for managing their investment portfolios.
There are two large cap indices in the Indian stock market, which are the S&P BSE Sensex, and the S&P CNX Nifty. On the basis of performance of both the indices, one can measure the changes in the market.
What is Sensex?
Sensex known as the Sensitive Index, Sensex is the stock market index of the Bombay Stock Exchange (BSE). Traders also refer to the Sensex as the S&P BSE Sensex. Introduced in 1986, the Sensex is India’s oldest stock index and comprises the top 30 listed companies in the BSE across a wide-range of sectors and industries.
What is Nifty?
The National Stock Exchange Fifty (Nifty) is the stock market index of the National Stock Exchange (NSE). The index was introduced in 1996 and is also referred to as CNX Nifty and Nifty 50 by traders. The Nifty comprises the top 50 companies across various sectors and industries that are listed in the NSE.
The index represents large-cap companies, which generally have a good degree of liquidity and are traded in stock exchanges. These companies represent approximately 70% - 75% of total market capitalization in India.
What are the differences between Nifty and Sensex?
| Sensex | Nifty |
|---|---|
| The Sensex is the benchmark index of the Bombay Stock Exchange. | The Nifty is the benchmark index of the National Stock Exchange. |
| Being introduced in 1986, it is the oldest stock index in India | Introduced in the year 1996, the Nifty is a relatively newer stock index. |
| Sensex is an amalgamation of the words “sensitive” and “index”. | Nifty is an amalgamation of the words “national” and “fifty”. |
| The index comprises the top 30 listed companies in the BSE. | The index comprises the top 30 listed companies in the BSE. |
| The stock index features companies across as many as 13 different sectors. | The Nifty, on the other hand, is broader and features companies across 24 different sectors. |
| The base value that’s utilized for the calculation of the index is 100. | The base value that’s utilized for the calculation of the index is 1000. |
| The base year that’s considered for the calculation of Sensex is 1978-1979. | The base year that’s considered for the calculation of Nifty is 1995. |