Sensex vs Nifty: what is the difference?
When the news says "the market rose today," it usually means the Sensex and the Nifty. They are two index numbers, and each tracks a group of large companies.
Sensex
- Run by the BSE (Bombay Stock Exchange).
- Tracks 30 large, well-established companies.
Nifty 50
- Run by the NSE (National Stock Exchange).
- Tracks 50 large companies.
Both are weighted by market value (the share of a company's shares that is freely available to trade). That means bigger companies move the index more than smaller ones. A big move in a bank or an IT giant can lift or drag the whole index.
Why two indices?
They are run by two exchanges, and they usually move in the same direction. Small differences exist because they include different companies.
Can you buy the Sensex or Nifty?
You cannot buy an index directly. But index funds and index ETFs hold the same companies in the same proportions, so they follow the index closely.
What the index does not tell you
It shows how large companies are doing. Small and mid-sized shares can move differently. On some days the index rises while more stocks fall than rise.
This article is for information and is not investment advice.