As an Indian investor buying or selling shares, you must understand the differences between Sensex and Nifty. You also need to learn how to measure financial market fluctuations. That’s where the discussion of stock market indexes comes into being. A stock market index is a portfolio of financial assets representing a segment of the current financial market.
Various stock market indexes are there. To mention a few, they are sectoral index, market capitalisation, and, most importantly, benchmark index. Speaking of the most significant benchmark indexes, Sensex and Nifty are the two benchmark indexes. This post narrates the key differences between the two benchmark indexes and how a Nifty screener allows you to compare the prospectus of the company you want to invest in.
Introducing What Is Nifty All About: Things to Know
Nifty is the National Stock Exchange’s flagship market index. It was initially launched in the year 1996. The term combines two words: National and fifty. That’s how the word Nifty emerged. Here, national is the index that belongs to NSE, while fifty is the indication that it includes the top 50 stocks on NSE.
The 50 stocks that are enlisted on the NSE account for around 65% of the total free-float market capitalisation of the exchange. Nifty50 includes the blue-chip stocks, which are the greatest firms based on the overall market cap. The enlisted stocks span around 24 sectors and are the most liquid.
Nifty investments can be carried forward in the three ways as mentioned below:
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Investments via Index Funds
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Direct investment in underlying shares or
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Trading in the index-based derivates
When it comes to stocks included in the market index, there are some eligibility criteria to consider. Besides, the index re-balancing is performed periodically. Take the example of a semi-annual basis. The index’s constituents might change according to the criteria.
Everything about Sensex in a Nutshell
India’s first and foremost equity index, Sensex, witnessed its launch in the year 1986. It’s the Bombay Stock Exchange’s market index, which happens to be the oldest Asian stock exchange. It’s an amalgamation of Index and Sensitive. Sensex includes the top 30 companies enlisted on the BSE. These companies are selected based on the following parameters:
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Market capitalisation
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Diversification and
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Liquidity
The overall value depends on the underlying stocks’ price movements.
Initially, Sensex followed a weighted market capitalisation technique for indexing purposes. But ever since the year 2003, it has followed the free-float market capitalisation.
Tabulated Format Presenting the Key Differences between Sensex and Nifty
Here’s a table presenting the key diff between Nifty and Sensex:
Both Sensex and Nifty are the key measures of the stock market performance in India. And incidentally, both are the reflection of the current economy of the nation. They are used as the benchmark to gauge development in the economy and understand sought-after stock market trends.