What are Sensex and Nifty?

Nutan Gupta

08 May 2017

New Page 1

Sensex and Nifty are stock market indices which represent Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) respectively.

Sensex - BSE is India’s first listed exchange which was established in 1875. The total companies listed on the exchange are close to around 6000. 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. It is traded internationally on the EUREX as well as leading exchanges of the BRCS nations (Brazil, Russia, China and South Africa). BSE Sensex consists of 30 top scrips from different sectors which forms this index. 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.

Nifty - NSE began its operations in the year 1994. Nifty consists of 50 top scrips from different sectors which forms this index. 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.

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Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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What are Sensex and Nifty?

Nutan Gupta

08 May 2017

New Page 1

Sensex and Nifty are stock market indices which represent Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) respectively.

Sensex - BSE is India’s first listed exchange which was established in 1875. The total companies listed on the exchange are close to around 6000. 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. It is traded internationally on the EUREX as well as leading exchanges of the BRCS nations (Brazil, Russia, China and South Africa). BSE Sensex consists of 30 top scrips from different sectors which forms this index. 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.

Nifty - NSE began its operations in the year 1994. Nifty consists of 50 top scrips from different sectors which forms this index. 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.

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