The stock exchange is unpredictable and frequently changes. A variety of reasons are responsible for the alterations. Market indices take these variables into account and provide a broad picture of the state of the nation’s economy and financial markets. Investors can make logical investing decisions after attentively watching the indices.
The success of all the companies listed on the stock exchange is reflected in a market index. It serves as a gauge for several aspects of the stock market, including market performance and price fluctuations. All stock market fluctuations are reflected in the index of the stock market. These indices make it easier for investors to recognize trends in the movement of the stock market and enable them to buy equities by those trends.
The indices for the BSE and NSE, respectively, are nifty and sensex. The stock indices provide information on market movements while stock markets list the stocks that are traded.
One of the first market indexes in India is the Sensex, the BSE market index also known as the S&P BSE Sensex. Stock Exchange Sensitivity Index is known as Sensex. The world’s top companies that are listed on the BSE for trading make up this group.
The success of thirty firms is represented in the calculation of the Sensex, which employs the free-float market capitalization technique. The free-float market capitalization technique displays the percentage of shares that are offered to the public by corporations in the market and are available for trading.
Nifty is an acronym for the National Stock Exchange Fifty, a stock market index. The top 50 NSE-traded firms make up the Nifty index. The free-float market capitalization approach is used to calculate Nifty in the same way as it is used to calculate Sensex.
Market capitalization is first calculated to determine Nifty. To determine market capitalization, the equity & market price is multiplied. The price is multiplied by equity capital at this point to determine free-float capitalization. To achieve free-float market capitalization, the figure will also be multiplied by the Investable Weight Factor (IWF). The IWF shows how many shares are available for trading on the stock market by investors.
It should be noted that 1,000 serves as the Nifty’s starting point. For the index value of Nifty on a daily basis, the current market value is multiplied by the base value, which is 1,000, and then divided by the base market capital.
Comparing the Sensex and Nifty:
- Nifty means for National Stock Exchange Fifty and is a stock market index of NSE, whereas Sensex is for the Stock Exchange Sensitive Index and is a stock market index for BSE.
- NSE Indices Ltd., a division of the NSE, runs Nifty. Sensex, on the other hand, is run by BSE.
- Sensex’s base index value is 100, whereas Nifty’s base index value is 1000.
- On the BSE and NSE, respectively, the Sensex index consists of 30 well-established corporations, while the Nifty index consists of 50 leading companies.
This was all the Sensex and nifty. We have discussed on Market index, Sensex, and nifty. Also, we have done a comparison between Sensex and nifty. If you are interested in trading, you can now start online trading. I hope this article will help you to gain a good knowledge of Sensex and nifty.