Basics of Stock Market - Beginner

Difference Between Sensex and Nifty

Before you invest, it is important to be aware of all the stakeholders involved in the stock exchange. Stock exchange is where traders and brokers can buy and sell shares and bonds, mutual funds and FDs.BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are the two most important stock exchanges of India. These provide capital raising opportunities for companies. These companies can create wealth and investors also benefit. The exchange can also be used to raise funds for development projects by the government.

What is an index?

Both novice investors and experienced investors need to read and monitor the stock market. First, let's define index. There are many thousand of companies that make up the stock exchanges. To understand the performance of the stock market, it is impossible to evaluate every stock. Therefore, a set of companies from different sectors is selected and a group is formed. This is known as an index. These companies are selected based on free-float market capital.

There is a difference between Nifty and Sensex:

Nifty and Sensex are two of the most popular terms in the stock market. News like Nifty reaches all-time high or Sensex crashes would be commonplace. These indices are important to investors. The movement of Sensex/Nifty corresponds to the movement of stocks in the index. Many factors can influence the movement and index. Sensex and Nifty can either rise or fall depending on the outcome of an election, escalation in trade wars, or announcements of a rate reduction. These are simply indicators of investor sentiment. Nifty and Sensex serve as indicators of India's economy. A country's investment culture is in good shape if its markets are in good health. Let's find out what the difference is between sensex and nifty.

What is Sensex?

Companies raise capital through IPO (Initial public Offering). After IPO is over, companies are listed on stock exchanges like NSE and BSE. This gives the public a greater chance to purchase these shares in order to achieve their short- or long-term goals.

Sensex, which is a combination index and sensitive, was introduced in 1986. It is the benchmark index for BSE. It includes 30 companies that are listed on BSE.

What is Nifty?

Nifty, which is derived the National Stock Exchange Fifty term, is made up of 50 companies that trade on NSE. It is the NSE benchmark index and was first introduced in 1996.

The following are the main factors that influence the performance of indices

The economy's state is reflected in stock markets. If the economy is slowing down, the stock market will also show it.

  • a. Changes in the interest rate

    Companies are more likely to borrow money when interest rates rise. Companies reduce their expenses to compensate. This has a negative impact on the earnings of the company and the stock market falls.

  • b. Inflation rate

    Investors don't have enough money to invest in high inflation. The higher input costs for companies also affect them, which they must pass on to consumers.

    c. The global economy:

  • Stock markets will be affected by a global recession. The stock market is also affected by factors such as crude oil prices, rupee appreciation, political instability, and others.


Difference between sensex & nifty

Sr. NoFeaturesSensexNifty
1Full form Index & SensetiveNational Stock Exchange Fifty
2Benchmark indexBSENSE
3No. No.3050
4Base Year1978-19791995
5Ownered byBSENSE Indices Limited (formerly India Index Services & Products Ltd.)

Technical charts that track the stock at regular intervals can help predict how stocks will move. It will be easier to trade in index once you understand the Sensex/Nifty and their weightage.

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