People actively seek information about Sensex, Nifty, and the differences between them, and are often asked the question that which is better Sensex or Nifty? And why? How do they work? How will they benefit from them?
Sensex and Nifty are the market indices that are known as the benchmarks of the stock market of India; they represent the market trend, business or industry development, and predict investment portfolios. Here, we explain Sensex and Nifty in-depth and their computation, the distinctions between the two, important components that affect the performance, types of stock market indices, significance, parameters, and criteria.
To trade on any of these stock markets, a trader or investor needs to open a Demat account first; many stockbroking firms let investors and traders open free Demat account to trade on these stock market exchanges so that they can trade freely.
What is an Index?
The Stock market Index helps in stock picking is helpful for beginners, reflects investor sentiments during the rising and fall of the market, and the big benefit is that the investor does not require much analysis of the companies who showed on the index.
Important elements that affect the performance of the Stock Market Index:-
- Interest Rate – Changes in interest rates experience the stock market fluctuation. When the government increases the interest rates, the companies’ borrowing costs will also increase due to which companies did cost-cutting. It impacts the company’s earnings and the price of its shares.
- Inflation Rate – Inflation affects the stock market index. It reduces investment power and companies suffer because of this. It also impacts sales and the company’s earnings, which directly affects to share’s price.
- Global Economy – When the global economic slowdown, affects the equity markets. The factors like currency exchange rates (rupee movements), crude oil prices, political instability, etc. impact stock market performance.
- Supply and Demand – Supply and demand both are inversely proportional to each other, so maintaining the balance of both is a must. If the company does well, then everybody buys that company’s stocks, which increases demand and brings scarcity in supply, which increases the price of the company’s stocks, and vice versa.
- Politics – If the government appears strong and brings good development and growth strategies for the country and businesses, then the stock price also rises, and if the government has fatigue policies then the price of stocks falls.
- Current Affairs – Current affairs like political disruption, terrorist attacks, wars between two nations, or any internal wars if occurred then it affects investor choices and stock market indices affects.
- Natural Disasters – Natural crises play a vital role in stock market indices because natural calamities changed the lives of people, which adversely affect the economy.
- Exchange Rates – The exchange rate means how much your currency value is as compared to, other foreign countries. Exchange rates impact the import and export markets which proportionally affect stock market prices.
- Company Factors – Stock prices directly link to the company, so if anything happens with or within the company will definitely affect the prices of stocks. If a company’s revenue, products, more investment made by investors, and reduced debts, then stock price increases, and if the company goes into debt, has poor management, product failure, and no revenue growth happens, then the company’s stock falls.
- Investor’s Choice – Investor choice can be of any, either bullish market or bearish market due to which market up and down affects a lot.
What is Sensex?
Sensex, i.e. Sensitive Index is an index of BSE (Bombay Stock Exchange) that represents the top 30 listed companies, which is evaluated on the basis of the company’s liquidity, market capitalization, revenue, and diversification.
It is one of India’s oldest indices, and people think of it as a proportion of market trends and impressions of the Indian economy. It is utilized as a benchmark to check development and improvement in the Indian economy and industry and comprehend the financial exchange pattern.
What is Nifty?
Nifty, i.e., national fifty is an Index of NSE (National Stock Exchange) that represents the top 50 listed companies comprising all 12 types of sectors such as IT, FMCG, automobile, metal, oil and gas, banks, healthcare, media, pharma, realty, finance services, telecommunication, etc.
What are the differences between Nifty and Sensex?
Comparison between Nifty and Sensex:-
|1||Full Form||National and Fifty||Sensitive and Index|
|2||Ownership||NSE subsidiary (National Stock Exchange), IISL||BSE (Bombay Stock Exchange)|
|3||Established Year||1996. Nifty is relatively newer compared to BSE.||1986. It is the oldest stock exchange in India.|
|4||Base Year||The base year that’s considered for the calculation of Nifty is 1995.||The base year that’s considered for the calculation of Sensex is 1978-1979.|
|5||Base Number||Base value used for the calculation of the index is 1000||Base value used for the calculation of the index is 100|
|6||Base Capital||₹ 2.06 Trillion||NA|
|7||Number of Stocks||Companies that come under the top 50 in the Nifty Index.||Companies that come under the top 30 in the BSE Index.|
|8||Number of Sectors||Nifty is a wider market index that covers 24 industrial sectors.||Sensex covers 13 industrial sectors.|
|9||Foreign Exchanges||Singapore Stock Exchange (SGX) and Chicago Mercantile Exchange (SME)||EUREX and stock exchanges of BRCS nations|
|10||Index Calculation||Free Float Market Capitalization||Free Float Market Capitalization|
|11||Volume and Liquidity||High||Low|
|12||Former Names||CNX FIFTY||S&P BSE SENSEX|
|13||Companies||Companies that come under the top 50 are known as the largest and most liquid companies.||Companies that come under the top 30 are known as the largest and most actively traded companies.|
Companies listed on Nifty and Sensex:-
|S.No.||Industry||Nifty (50 Companies)||Sensex (30 Companies)|
|1||Automobile||Maruti Suzuki India Ltd.||Maruti Suzuki India Ltd.|
|2||Automobile||Mahindra & Mahindra Ltd.||Mahindra & Mahindra Ltd.|
|3||Automobile||Bajaj Auto Ltd.||Bajaj Auto Ltd.|
|4||Automobile||Hero MotoCorp Ltd.||—|
|5||Automobile||Eicher Motors Ltd.||—|
|6||Automobile||Tata Motors Ltd.||—|
|7||Banking||ICICI Bank Ltd.||ICICI Bank Ltd.|
|8||Banking||Kotak Mahindra Bank Ltd.||Kotak Mahindra Bank Ltd.|
|9||Banking||AXIS Bank Ltd.||AXIS Bank Ltd.|
|10||Banking||State Bank of India||State Bank of India|
|11||Banking||IndusInd Bank Ltd.||IndusInd Bank Ltd.|
|12||Banking||HDFC Bank||HDFC Bank|
|13||Cement||UltraTech Cement Ltd.||UltraTech Cement Ltd.|
|14||Cement||Shree Cement Ltd.||—|
|15||Cement||Grasim Industries Ltd.||—|
|17||Construction||Larsen & Toubro Ltd.||Larsen & Toubro Ltd.|
|18||Consumer Goods||Hindustan Unilever Ltd.||Hindustan Unilever Ltd.|
|19||Consumer Goods||ITC Ltd.||ITC Ltd.|
|20||Consumer Goods||Asian Paints Ltd.||Asian Paints Ltd.|
|21||Consumer Goods||Nestle India Ltd.||Nestle India Ltd.|
|22||Consumer Goods||Titan Company Ltd.||Titan Company Ltd.|
|23||Consumer Goods||Britannia Industries Ltd.||—|
|24||Energy – Oil & Gas||Reliance Industries Ltd.||Reliance Industries Ltd.|
|25||Energy – Oil & Gas||Oil & Natural Gas Corporation Ltd.||Oil & Natural Gas Corporation Ltd.|
|26||Energy – Oil & Gas||Bharat Petroleum Corp. Ltd.||—|
|27||Energy – Oil & Gas||Indian Oil Corporation Ltd.||—|
|28||Energy – Oil & Gas||GAIL (India) Ltd.||—|
|29||Energy – Power||Power Grid Corporation of India Ltd.||Power Grid Corporation of India Ltd.|
|30||Energy – Power||NTPC Ltd.||NTPC Ltd.|
|31||Energy & Mining||Coal India Ltd.||—|
|32||Financial Services||Housing Development Finance Corporation Ltd.||Housing Development Finance Corporation Ltd.|
|33||Financial Services||Bajaj Finance Ltd.||Bajaj Finance Ltd.|
|34||Financial Services||Bajaj Finserv Ltd.||Bajaj Finserv Ltd.|
|35||Information Technology||Infosys Ltd.||Infosys Ltd.|
|36||Information Technology||Tata Consultancy Services Ltd.||Tata Consultancy Services Ltd.|
|37||Information Technology||HCL Technologies Ltd.||HCL Technologies Ltd.|
|38||Information Technology||Tech Mahindra Ltd.||Tech Mahindra Ltd.|
|39||Information Technology||Wipro Ltd.||—|
|40||Infrastructure||Adani Port and Special Economic Zone||—|
|42||Media & Entertainment||Zee Entertainment Enterprises Ltd.||—|
|43||Metals||Tata Steel Ltd.||Tata Steel Ltd.|
|44||Metals||Hindalco Industries Ltd.||—|
|45||Metals||JSW Steel Ltd.||—|
|46||Pharmaceuticals||Sun Pharmaceutical Industries Ltd.||Sun Pharmaceutical Industries Ltd.|
|48||Pharmaceuticals||Dr. Reddy’s Laboratories Ltd.||—|
|49||Telecommunication||Bharti Airtel Ltd.||Bharti Airtel Ltd.|
|50||Telecommunication||Bharti Infratel Ltd.||—|
Hope this article provides you with a good understanding of the stock market index along with the understanding of Sensex and nifty, the differences between Sensex and nifty, and how they connected with stock market indices with indices performance factors. If looking for more about investment and trading, then visit our website.
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