Difference between Nifty and Sensex

There are two primary stock exchanges that are currently operational in India - the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Both of these exchanges are completely electronic and together feature more than 7,000 companies. On every single trading day, millions of trades take place on both of these exchanges. Since these exchanges are electronic, you would need a free demat account to take part in the trading process.

With such a large number of companies listed on these exchanges, it is nearly impossible to keep track of the movement of the stock market in its entirety. And so, to make the process easier, the stock exchanges came up with the concept of indices. One look at these indices is more than enough for an individual to determine which way the market is moving.

In India, there are two stock indices that help traders and investors track the movement of the stock market - Nifty and Sensex. To understand the specifics of these two indices and the differences between them, let’s quickly run through the concept of an index.

What is a stock index?

Technically, a stock index is a carefully curated list of companies that are listed on an exchange. The companies that feature in the index usually span across multiple sectors and industries in the economy. Furthermore, the companies in a stock index are generally well-established and represent their industry or sector.

Since an index has companies from almost all the major sectors and industries, it is widely regarded as one of the best indicators of the performance of an economy. In addition to being able to invest in companies, you can also invest in stock indexes through various mutual fund schemes. However, you would again be required to possess one of the best demat accounts to get started.

Now that you know what a stock index is, let’s move onto the two major indices of the country - Sensex and Nifty.

What is Sensex?

Derived from the words ‘sensitive’ and ‘index’, the Sensex is the benchmark index of the Bombay Stock Exchange (BSE). Traders also refer to the Sensex as the S&P BSE Sensex. Here’s a fun fact for you. Introduced in 1986, the Sensex is India’s oldest stock index and comprises the top 30 listed companies in the BSE across a wide-range of sectors and industries.

What is Nifty?

Also known as the National Stock Exchange Fifty, the Nifty is the benchmark index of the National Stock Exchange (NSE). The index was introduced in the year 1996 and is also referred to as CNX Nifty and Nifty 50 by traders. The Nifty comprises the top 50 companies across various sectors and industries that are listed in the NSE.

Read More Here: What Do Sensex, BSE, NSE, and Nifty Mean?

What are the differences between Nifty and Sensex?

Let’s delve a little deeper into these two indices and get to know the differences between them

Conclusion

Now that you’re aware of the differences between Nifty and Sensex, here’s another fun fact. Some well-established and fundamentally stable companies feature in both the Nifty and the Sensex. On a related note, as an investor, investing in either one of these indices allows you to be a part of the wealth creation process. That said, make sure that you have a free demat account to get started. Because you need the best demat account to be able to invest seamlessly in the stock markets and kickstart the capital appreciation process.