It can be difficult to choose a stock among the huge number of shares. This is where a stock indicator comes in handy. A stock index is a measure of the market's overall health. This index can be used to determine the stock's performance by comparing its value over time. Stock-picking is made easier by these features. A stock index can help you analyze the overall market trend. Two major stock indices are available: Nifty, which is for National Stock Exchange (NSE), and Sensex, which is for Bombay Stock Exchange.
Nifty 50 is a combination two words: National & Fifty. It consists of 50 weighted stocks from the most important Indian companies that are listed on NSE. It is the most traded contract and covers 14 sectors.
Nifty 50 is calculated using the weighted values of 50 stocks on NSE. It is based upon free-float market capitalisation. Market capitalisation is used to calculate the index value. It reflects the stock's value relative to the base period. The market value is the sum of several shares and market price per share.
Index value = Current Market Value / (Base market capital * Base Index Val)
Nifty's value is determined by weighted costs. Companies with large stocks have a greater impact on the value than those with less capital.