NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are India's two primary stock exchangers. NSE and BSE are platforms where shares of big companies in India are bought and sold. Nifty and Sensex are the indices of both these platforms i.e., coordinates. If you do not understand the meaning of index, then do not worry; you will understand better later.
Nifty is an index of 'NSE', and Sensex is an index of 'BSE.' More than 1600 companies are involved in the NSE market, while there are more than 5000 companies involved in the BSE, so if we want to know the condition of the entire NSE or BSE market every day, then we have to see the performance of all the companies involved in the NSE and BSE market. Still, it is not possible to do this every day. Therefore, the index ie, Nifty and Sensex, were created in both these stock exchangers.
Because there are millions of people in India work in the stock market, invest money in the market, and buy and sell shares of companies. Therefore, it is essential for all investors to know every day how the market is doing today because the shares of companies are bought and sold based on market fluctuations.
But as we told you earlier, there are more than 1600 companies in NSE and more than 5000 companies in BSE. Therefore, investors cannot check all these companies daily. So how was the overall market condition? Nifty and Sensex were brought to show this.
The purpose of bringing Nifty and Sensex is just that we can get an idea by looking at Sensex and Nifty, and how the market is today. Nifty and Sensex benefit those who invest money in the stock market. Because at present, more than 7000 companies are involved in the stock market.
Right now, we cannot check these 7000 companies every day. That's why Nifty and Sensex was created, in which the most prominent companies of the country are included, and after that, as these top companies perform, the points of Nifty and Sensex keep on increasing and decreasing accordingly.
So if you see the points of Nifty and Sensex going up with green color then it means that today the market of India was good since yesterday (from last day) and same if the points of Sensex and Nifty going down with red color. If seen, it means that today the condition of India's stock market was worse than the previous day.
But every time, it is not necessary that if the graph of Nifty and Sensex is going down, then the graph of all the stock market companies will go down. As we told you that only the most significant 50 companies of the country are included in the Nifty, and only the most significant 30 companies of the country are included in the Sensex.
Based on them, the points of Sensex and Nifty keep on increasing. But this does not mean that if the points of Nifty and Sensex are falling today, then the points of all the stock market companies will fall. It has been seen many times that there is a big difference in the fluctuations of companies included in Nifty and Sensex and other companies.
We do not need to see all the companies know the condition of the stock market; we can know the condition of the market just by looking at the Nifty and Sensex.
Like Nifty and Sensex are the major indices of the stock market; similarly, indexes have been made for different sectors in NSE and BSE.
For example, if you only want to see the market of companies in the bank sector, then you can look at the Banknifty index of NSE, and you can see the BANKEX index on BSE. Similarly, in the stock market, there are different indices of Small Cap (small companies) and Mid Cap (medium companies).
What is Nifty?
As we have told you above, Nifty is the index of NSE; by looking at this we can know the complete condition of the NSE market. The word Nifty is made up of a combination of National and Fifty.
Here the word National has been taken because it is an index of NSE (National Stock Exchange), and the word Fifty has been taken because only 50 companies i.e., Fifty companies, are included in it. Currently, more than 1600 companies are included in NSE, but only the top 50 companies are included in Nifty. Therefore, nifty is also known as ' Nifty Fifty. '
What is Sensex?
Sensex is the index of the BSE market, by looking at which we can know the condition of the BSE market. The word Sensex is made up of the words Sensitive and Index. The top 30 largest companies are included in Sensex. Therefore, based on the performance of these top 30 companies, the movement of Sensex keeps going up and down.
Companies from every sector are included in the Nifty and Sensex. The companies with higher free float market caps are included in Nifty and Sensex. The status of all the companies in the market is checked every 3 months.
In this, if the value of a company included in Nifty and Sensex decreases, then it is taken out of Nifty and Sensex, and in its place, another company is included. But the condition for this is that the company which is currently being included in Nifty or Sensex should be more than the company going out of Nifty Sensex.
What is Free Float Market Cap?
One is the company's actual value, which is called the company's market cap, and one is the company's free-float market cap; so what is the difference between a company's market cap and free-float market cap? Let us tell you.
For example, suppose there is a company whose value is 100 crores, then here 100 crores are the actual value of that company i.e., its market cap.
At present, for all the companies involved in the stock market, 100% of rights on those companies do not belong only to the company owner. Some share goes to other investors as well. Therefore, the part of the company that is with the investors is the Free Float Market Cap of that company.
For example, suppose there is a company whose total value is 100 crores, in which ₹60 crores has been invested by the owner of that company and ₹40 crores is not invested by many other small investors. So here, the Free Float Market Cap of that company became ₹40 crores.
In this way, only those largest companies are included in Nifty and Sensex, which have the highest Free Float Market Cap. All the stock market companies are tracked every 3 months, and changes in the companies of Nifty and Sensex keep happening.
I hope after reading this article, all your doubts will be cleared regarding Nifty and Sensex.