The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are two of the most prominent stock exchanges in India, in which majority of the country’s equity trades are conducted. Sensex is a stock index that is used by the BSE, and Nifty is one of the indexes that are used by the NSE. Sensex is the more popular and widely used of the two indexes as it is the index that is used as a benchmark which represents the performance of Indian equity markets worldwide. The following article offers clear explanations of the both the Sensex and Nifty index and highlights their many similarities and differences.
Sensex
The Bombay stock exchange is one of the oldest stock exchanges in India, and it was started up in 1875. Sensex, BSE’s index was started up years later in 1986. The BSE has the largest number of stock listings of over 4000, and the Sensex index tracks 30 stocks that are listed in the BSE. The 30 stocks that comprise the Sensex index are an indication of the financial performance of all the stocks listed on BSE. The Sensex, much like any other stock market index provides an indication of the movement of the companies that are traded on the BSE. Sensex is known as the “sensitive index” of the BSE. Companies that represent the Sensex index include Tata Motors, Reliance, Wipro, Bajaj Auto, ACC, ITC, etc. If the Sensex index increases this means that the majority of the stocks that are listed on the BSE are increasing in price and if the Sensex declines the opposite is true.
Nifty
The National Stock Exchange was started up in 1992, and the Nifty index came into existence in much later (after Sensex was introduced). Nifty is the index of the NSE and tracks 50 of the shares listed on NSE. The 50 stocks that make up the NSE are a representation of the financial performance of all the stocks that are listed under the NSE. Since Nifty comprises 50 shares, the Nifty index is broader and represents shares of 24 sectors. All 50 stocks do not carry a similar weight in the index; the stocks will be assigned different weights so as to provide an accurate representation of the stocks listed on the NSE. Nifty is broken up into two parts; ‘N’ stands for National and ‘ifty’ for 50 (since the index tracks 50 stocks).
What is the difference between Nifty and Sensex?
Sensex and Nifty are both stock market indexes that track the movement and financial performance of the shares listed in their respective stock exchanges. While Sensex is the index of the BSE (Bombay stock exchange), Nifty is the index used in the NSE (National Stock Exchange of India). Sensex has been around for longer than Nifty and is, therefore, more widely used than the Nifty index. Sensex represents 30 stocks, in comparison to Nifty that represents 50 stocks. Nifty is more broad based than Sensex and represents a vast number of Indian industries.
Summary:
Nifty vs Sensex
• The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are two of the most prominent stock exchanges in India, in which majority of the country’s equity trades are conducted.
• The BSE has the largest number of stock listings of over 4000, and the Sensex index tracks 30 stocks that are listed in the BSE.
• Nifty is the index of the NSE and tracks 50 of the shares listed on NSE.
• Sensex is more widely used than the Nifty index.
• Nifty is more broad based than Sensex and represents a vast number of Indian industries.