Brief introduction about SENSEX and NIFTY?

Published By Ayesha Jaiswal, 8 Nov 2017

Brief introduction about SENSEX and NIFTY?

There is two primary index in the market sensex and nifty that indicate market movement regularly, on the basis of that index most of the investors take their decision regarding their investment. Many people often confused about both the terms, to clear this confusion a trader can refer suggestions of financial market experts by taking their stock tips, market calls recommendations etc. This will help traders to understand various terms related to the stock market.

Sensex is a well-structured market index consists of 30 super established companies listed on Bombay Stock Exchange that is why it is also called BSE 30. These 30 companies come from all over leading sectors of Indian economy.

It is the prominent market index consisting of 30 reputed and financially sound companies listed on Bombay Stock Exchange (BSE). Following are some important points related to Sensex -

1. Top 30 companies listed in Sensex are selected on the basis of the free float market capitalisation.

2. Companies listed on the stock exchange are very reputed and they come from the different sectors of the market.

3. The base year is 1978-79 and the base value is 100.

4. Sensex is a supreme index of the stock market, also It is an indicator of market movement.

5. Sensex indicates the market movement that means if the Sensex goes up means most of the stocks in India went up during the given period. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE has gone down.

How it is calculated -

Free-float Market Capitalization method is generally used to calculate the Nifty index. In this method, the index reflects the free-float market value of the 30 integral stocks irrespective of a base period.


Nifty is consist of two words ‘National’ and ‘FIFTY’. The word fifty indicates that the index consists of 50 actively traded stocks from various leading sectors. Basically, nifty is consist of fifty companies from 24 different sectors”.

How it is calculated -

NIFTY 50 is calculated by using a free float market capitalization weighted method, wherein the level of the index reflects the total market value of all the stocks in the index relative to a particular base period. Following are the formula used to calculate Nifty -

Market Capitalization = Equity Capital x Price

Free Float Market Capitalization = Equity Capital x Price x IWF

Index Value = Current Market Value / Base Market Capital x Base Index Value (1000)

Sensex and nifty are the prominent stock exchanges in the country. Most of the stock trading in the country is done through the BSE & the NSE. A trader purchase and sell those stocks which are listed on the stock exchange. Many traders take suggesting from financial experts with their stock trading recommendations, binary option trading tips, forex tips and much more to increase profit in the market.