The Sensex & The Nifty

What are the Sensex & the Nifty?

• The Sensex is an "index". It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down.
• The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE.
• If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down.
• Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE. Just in case you are confused, the BSE is the Bombay Stock Exchange and the NSE is the National Stock Exchange. 
  
• The BSE is situated at Bombay and the NSE is situated at Delhi. These are the major stock exchanges in the country. There are other stock exchanges like the Calcutta Stock Exchange etc. but they are not as popular as the BSE and the NSE. Most of the stock trading in the country is done though the BSE & the NSE. Besides Sensex and the Nifty there are many other indexes. 
• There is an index that gives you an idea about whether the mid-cap stocks go up and down. This is called the “BSE Mid-cap Index”. There are many other types of indexes. There is an index for the metal stocks. There is an index for the automobile stocks etc.

NOTE:-

• The stocks selected are based upon a number of parameters that the creators of the index decide. Equally, the valuation is also done using complex mathematical principles.
• Periodically, the list of shares used for computing the index also undergoes a change. 
• These changes are decided by the index creators based on the parameters they have set for the stocks for inclusion.
• An index shows whether the stock market, on the whole, is appreciating in value or declining in value.
• The movement of the index itself is no indicator for individual shares. 
• You may find that a particular share may be increasing in its price even when the index is down and vice versa. 
• The index is only an indicator of the general trend. 
• The common indexes in Indian stock markets are the SENSEX, the index for stocks listed on the Bombay Stock Exchange and Nifty, the index for stocks listed on the National Stock Exchange.