What Are Sensex & Nifty?
Sensex and Nifty are stock market indices which represent Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) respectively.
What Is Sensex?
The Sensex, the market index of BSE which is also known as S&P BSE Sensex, is one of the oldest market indices in India. BSE being India’s first listed exchange has a total of 6000 companies listed making it impossible to track the performance individually. The total market capitalisation of all the companies listed on BSE is Rs. 1,24,69,879 crore. BSE’s popular equity index – the S&P BSE SENSEX – is India’s most widely tracked stock market benchmark index. BSE Sensex consists of 30 top scrips from different sectors which forms this index.
How Is The BSE Sensex Calculated?
BSE SENSEX is calculated on a free-float market capitalization methodology and the performance of these stocks impact the performance of Sensex.
BSE has recently launched a special platform for trading in SME securities. It has also launched a free float index – S&P BSE Sensex. BSE has a lot of other indices under various categories of Equity and fixed income. Indices under Equity include- Market cap/broad, Sector & Industry, Thematics, Strategy, Sustainability, and Volatility. Indices under Fixed income include – Composite, Government, Corporate, and Money Market.
Finally, to calculate the value of Sensex, the free-float market capitalisation value is divided by the base value or the index divisor of 100. Important point to note is that the the base value to be used for calculating the capitalization for Sensex is 100.
What Is Nifty?
Nifty, a stock market index of the National Stock Exchange, stands for National Stock Exchange Fifty. Nifty comprises top 50 companies that are traded in the NSE.
NSE began its operations in the year 1994. NSE has a lot of other indices under various categories – broad market indices, sectoral indices, strategy indices, thematic indices and fixed income indices. The total market capitalisation of all the companies listed on NSE is Rs 12,282,127 crore.
In the year 2016, NSE launched Nifty 50 Index futures trading on TAIFEX. Nifty50 was earlier known as CNX Nifty. It was renamed Nifty50 in the year 2015. NSE has also been felicitated with a lot of awards over the years.
How Is The Nifty 50 Calculated?
In order to calculate market capitalisation of Nifty 50 you have to multiply equity and market price.
The next step is to multiply the result with Investable Weight Factor (IWF) to obtain free-float market capitalisation. The IWF indicates the proportion of the shares that investors can trade in the stock market.
Also the important point to note when calculating the market capitaliztion is the base value, which is 1,000 in case of Nifty 50.
The current market value is divided by the base market capital and then it is multiplied by the base value, i.e., 1,000, for the index value of Nifty on a daily basis.
Frequently Asked Questions: -
The full form meaning of SENSEX is Stock Exchange Sensitive Index. It is the one of the oldest stock exchanges in India which was also known as BSE-30. It has been a free floating stock market index which uses free floating market capitalization method to reflect the position of companies.
NIFTY stands for National Stock Exchange Fifty. It is also known as CNX Nifty, Nifty 50 or simple Nifty. It comprises of 50 stock exchanges accounting for 23 sectors of the economy.
One cannot choose between the two. Both Sensex and Nifty are benchmark indices of BSE and NSE, respectively. Nifty consists of 50 stocks is a broader index than Sensex, which contains top 30 performing stocks. If you compare only the data, then Sensex has performed better than Nifty, which has a broader base of 50 companies.
Sensex is calculated based on the value of top 30 companies having the maximum market capitalization. Nifty consider a much broader base to include the top 50 trading stocks, and hence, is more diversified. Also the Base value which is the divisor while calculating the nifty and sensex is also higher in case of nifty.