The Indian stock exchange has over 7000 companies listed on it. For a normal trader or investor, it is nearly impossible to keep a track of all of these companies to understand the market movement. That is why, there are Nifty and Sensex, two market indices made from selected listed companies that represent the entire market. They help us determine the market performance and understand the overall economy.

Let us understand the specifics of these two indices and learn the difference between Nifty and Sensex.

What is Stock Index?

Stock index is the measurement of the overall performance of the stock market. An index picks a sample of listed companies spanning across multiple sectors and industries that act as a representative.

So, when we have to understand the market direction, we look at these market indices. They indicate the market behaviour or investor sentiment. An upward movement of indices indicates a bullish trend whereas a downward movement indicates a bearish trend.

Two Primary Market Indices – Nifty and Sensex

Nifty is the benchmark index of the National Stock Exchange (NSE) and the Sensex is the benchmark index of the Bombay Stock Exchange (BSE). Nifty, also known as Nifty 50 comprises of the top 50 companies across various sectors and industries that are listed on the NSE. Sensex comprises of the top 30 listed companies on the BSE.

Differences Between Nifty and Sensex

Below mentioned are the key differences between the market indices – Nifty and Sensex:

Parameters Nifty Sensex
Benchmark Index Nifty is the benchmark index of the National Stock Exchange (NSE). Sensex is the benchmark index of the Bombay Stock Exchange (BSE).
Full-Form The word Nifty is derived from the words – ‘National’ and ‘Fifty’. The word Sensex is derived from the words – ‘Sensitive’ and ‘Index’.
Incorporation Nifty was introduced in the year 1996. It is a relatively newer stock index. Sensex was introduced in the year 1986. And hence, it is the oldest stock index in India.
Number of Companies Nifty comprises of the top 50 listed companies on the NSE. Sensex comprises of the top 30 listed companies on the BSE.
Number of Sectors Nifty features companies across 24 different industrial sectors. Sensex features companies across 13 different industrial sectors.
Base Value The base value for the calculation of Nifty is 1000. The base value for the calculation of Sensex is 100.
Base Year The base year for the calculation of Nifty is 1995. The base year for the calculation of Sensex is 1978-1979.
Volume and Liquidity Nifty enjoys a high trade volume and liquidity in comparison to Sensex. Sensex has a low trade volume and liquidity in comparison to Nifty.
Operated By Nifty is operated by India Index Services and Products (Subsidiary of National Stock Exchange) Sensex is operated by BSE (Bombay Stock Exchange)
Website www.nseindia.com www.bseindia.com

Conclusion

Hope the above article clarifies the difference between Nifty and Sensex. For investing in either of the indices, you need to open demat account .

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