What is Sensex and Nifty? Beginners complete guide in 2020


What is Sensex and nifty?

What is sensex and nifty

Brief introduction-

Do you want to know about Sensex and Nifty? Then you came to the right place. Here we will discuss "What is Sensex and Nifty?". Before you know about Sensex and Nifty, you have to understand the share market fundamentals and India's stock exchange.

Moreover, what is IPO(Initial Public Offering)? In this article, we have discussed what you need to know to understand Sensex and nifty. So we have requested you to follow the article from first to last.

Share Market fundamentals.

Note: You can go to your desired section of this post through the content below.

    share market

    Share market is the place where the general public or investor can invest their money to gain a unit of ownership of the company. And this unit is called a share that you bought from the sharemarket.


    Take an example- you bought 30 shares of Rs.300 each of Xyz company. You became a shareholder of the Xyz company. You can sale this share whenever you want according to your profit. The investing in stock can fulfill your dreams, like buying a car and property.


    Why companies sell it's share to the public? You may raise this question in your mind. Every company needs capital or money to grow or expanse its businesses.

    IPO

    With the help of initial public offering (IPO), companies can issue shares to the general public or investor. Don't confuse, IPO is a process by which the company renders its share. To raise money form the public by selling its shares company should be listed on NSE (National Stock Exchange)or BSE (Bombay Stock Exchange).


    Nifty and Sensex are indices of NSE and BSE. Follow the article to know more.

    Nifty And Sensex.


    First, understand the Indian stock exchange to understand "What is Sensex and nifty?". Two stock exchanges capture the whole market. The first one is the Bombay Stock Exchange (BSE), and the second one is the National Stock Exchange (NSE). First, understand the BSE.

    Bombay Stock Exchange (BSE).

    bombay stock exchange

    Premchand Roychand founded BSE on 9th July 1875. The location is Mumbai Maharashtra, India.

    During the 19th century, BSE was Asia's first stock exchange. Now it is the world's 10th largest stock exchange. Overall, market capitalization is more than $2.2 trillion till the date of April 2018. It is the oldest stock exchange in Asia.

    It is becoming the first stock exchange to be recognized by the Indian government under the Securities Contracts Regulation Act. (1980) On August 31, 1957. It developed the BSE SENSEX index to measure the overall performance of exchanges.

    In 1995 BSE switched to an electronic trading system developed by CMC Ltd. This automated platform, BOLT (BSE online trading), had a capacity of 8 million orders per day. BSE is the world's fastest stock exchange with a median speed of 6 microseconds. More than 5500 companies currently listed on BSE.


    Understand what an index is.

    -Since many companies have listed in the stock exchange, it is difficult to track all of them together to know market performance at a time. Here is the requirement of the index. A smaller sample is taken to represent the whole market. This sample is called an index is used to measure the value of a section of the stock market.

    Sensex

    sensex

    Sensex is the market index of the Bombay Stock Exchange. It consists of 30 well-established companies from different sectors, also named BSE-30.

    Some notable point-

    1. Those companies selected based on their free-float market capitalization.
    2. Every single company is from a different sector to represent the market performance of the specific industry.
    3. The base year of BSE is 1978-1979, and the base value is 100.
    4. Sensex is an indicator of market movement.
    5. If Sensex shows green, it means most of the significant stock in BSE went up during the given period.
    6. If Sensex shows red, it means most of the significant stock in BSE goes down during the given period.

    Let's take an example, suppose the Sensex is 32,000 today. Tomorrow it goes down to 31,950; it means the majority of 50 companies' financial condition is not in good condition. I.e., their shares are falling.



    Here is the list of 30 companies indexed on BSE as of 24 December 2018.
    #
    Companies
    Sector
    Date Added
    1
    Asian Paints
    Paints & Varnishes
    21 December 2015
    2
    Axis Bank
    Banking
    3
    Bajaj Auto
    Automotive
    4
    Bajaj Finance
    Finance
    24 December 2018
    5
    Telecommunications
    6
    Coal India
    Mining & Minerals
    8 August 2011
    7
    HDFC Bank
    Banking
    8
    Software
    24 December 2018
    9
    Hero MotoCorp
    Automotive
    10
    Hindustan Unilever
    Personal Care
    11
    Housing Development Finance Corporation
    Finance
    12
    ICICI Bank
    Banking
    13
    IndusInd Bank
    Banking
    18 December 2017
    14
    Software
    15
    ITC
    Cigarettes & FMCG
    16
    Kotak Mahindra Bank
    Banking
    19 June 2017
    17
    Larsen & Toubro
    Infrastructure
    18
    Mahindra & Mahindra
    Automotive
    19
    Maruti Suzuki
    Automotive
    20
    NTPC
    Power
    21
    Oil and Natural Gas Corporation
    Oil & Gas
    22
    Power Grid Corporation of India
    Power
    20 June 2016
    23
    Conglomerate
    24
    State Bank of India
    Banking
    25
    Sun Pharmaceutical
    Pharmaceutical
    8 August 2011
    26
    Software
    27
    Tata Motors
    Automotive
    28
    Tata Motors DVR
    Automotive
    19 June 2017
    29
    Tata Steel
    Steel
    30
    Vedanta
    Mining & Minerals
    18 June 2018
    31
    Yes Bank
    Banking
    18 December 2017




    Source: BSE India.

    National Stock Exchange (NSE).

    national stock exchange

    Now we discuss the National Stock Exchange, the leading stock exchange of India located in Mumbai. To know "What is Sensex and nifty?" it is essential to understand what is NSE. 

    It brought about a change in the Indian stock market and ended the monopoly of BSE. In 1992 NSE was established as the inception of the demutualized electronic stock exchange in India. Vikram limaye is the MD and CEO of NSE.


    NSE was the first to provide a modern, fully automated screen-based electronic trading system in India that offered a comfortable trading facility to the investors across the world. More than US$2.27 trillion is the total market capitalization of NSE. 

    Till the date as of April 2018, making NSE the world's 11th largest stock exchange. Nifty, i.e., nifty-50, is the index of NSE. The world's investor uses this index as a barometer of India's capital market. Estimated that six crores retail investors had invested their money in stock in India through a mutual fund or direct purchase of equity. A total no of 1952 companies listed in NSE.

    Nifty-50.

    nifty

    NSE's flagship index is Nifty-50. It is consists of 50 well established and financially enriched companies. These companies are the performance indicator of the whole market.

    Some notable point-

    1. Nifty is consist of the top well established  50 companies from different sector.
    2. The calculation of the index is dependent on 50 companies, based on the activity of trading.
    3. Nifty-50 indexed companies are from different 24 sectors.
    4. India Index Services and Products (IISL) controlled Nifty.
    5. Since the beginning, Nifty has given a return of 12.13% Compound annual growth rate (CAGR) (till April 2018).

    Here is the list of 50 companies indexed on NSE as of 27 September 2019.

    Company Name
    Sector
    Asian Paints Ltd
    Consumer Goods
    Axis Bank
    Banking
    Bajaj Auto
    Automobile
    Bajaj Finance
    Financial Services
    Bajaj Finserv
    Financial Services
    Bharti Airtel
    Telecommunication
    Bharti Infratel Ltd.
    Telecommunication
    BPCL
    Energy - Oil & Gas
    Britannia Industries
    Consumer Goods
    Cipla
    Pharmaceuticals
    Coal India
    Energy & Mining
    Dr. Reddy Lab
    Pharmaceuticals
    Eicher Motors
    Automobile
    GAIL
    Energy - Oil & Gas
    Grasim Industries
    Cement
    HCL Technologies
    Information Technology
    HDFC
    Financial Services
    HDFC Bank
    Banking
    Hero MotoCorp
    Automobile
    Hindalco Industries
    Metals
    Hindustan Unilever
    Consumer Goods
    ICICI Bank
    Banking
    IndusInd Bank
    Banking
    Infosys
    Information Technology
    IOC
    Energy - Oil & Gas
    ITC Limited
    Consumer Goods
    JSW Steel
    Metals
    Kotak Mahindra Bank
    Banking
    Larsen & Toubro
    Construction
    Mahindra & Mahindra
    Automobile
    Maruti Suzuki
    Automobile
    Nestle India Ltd
    Food Processing
    NTPC Limited
    Energy - Power
    ONGC
    Energy - Oil & Gas
    PowerGrid Corporation of India
    Energy - Power
    Reliance Industries
    Energy - Oil & Gas
    State Bank of India
    Banking
    Sun Pharmaceutical
    Pharmaceuticals
    Tata Consultancy Services
    Information Technology
    Tata Motors
    Automobile
    Tata Steel
    Metals
    Tech Mahindra
    Information Technology
    Titan Company
    Consumer Goods
    UltraTech Cement
    Cement
    United Phosphorus Limited
    Chemicals
    Vedanta
    Metals
    Wipro
    Information Technology
    Yes Bank
    Banking
    Media & Entertainment




    Source- NSE India.

    Video guide to understanding what is Sensex and nifty.

    This video is from my favorite youtube channel name FinnovationZ.com. The language of this video is Hindi. Watch this to more engaged in the stock market. Video shared for educational purposes only.


                                                     


    what is sensex and nifty

    Some FAQ on "What is Sensex and Nifty?".


    What is the difference between Sensex and Nifty?

    Ans. In India, the two most well-known stock exchanges are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). Sensex and Nifty are different stock indexes of BSE and NSE, respectively.

    Main differences between Sensex and Nifty are-
    1. National fifty consider as nifty and Sensitive index is regarded as Sensex.
    2. Sensex is related to BSE, and Nifty is relevant to NSE.
    3. The Sensex is much older then nifty.
    4. Nifty is the indicator of the top listed 50 companies heavily traded on NSE.
    5. Thirty most traded companies on BSE are the Sensex indicator.

    Sensex performance 1997-2017.
    sensex-performance




    Nifty performance 1997-2017.

    nifty-performance



    Importance of market index.
    1. The market index is the indicator of market performance; the market performed well or not during a specific period.
    2. It is like a barometer to the investor to know the performance of the capital market.
    3. The market index used as a benchmark portfolio performance.
    4. The market index can give a basic idea of returns on investments in stock markets.

    Conclusion.


    I hope you understand "What is Sensex and Nifty?" through this article. If you like this, please share it with your friend. Have any doubt? Please comment below. Revisit this blog to resolve your query.[full_width]


    What is Sensex and Nifty? Beginners complete guide in 2020 What is Sensex and Nifty? Beginners complete guide in 2020 Reviewed by Bouddhajit on 10/05/2019 09:23:00 PM Rating: 5

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