In India, there are two major stock exchange indices that depict the trends in the stock market of the country. These indices are formed to keep track of the thousands of listed companies, and in an economy like India, these become a necessity. 

These two indices are the Nifty and Sensex. The two are essential in determining the direction of stock flow. 

Let’s learn more about the stock market, the indices Nifty and Sensex, and the difference between the two. 

What Is Index?

A stock index is a meticulously compiled list of businesses that are listed on the stock market. It is a statistical measure of a shift in the performance of securities and gauges the overall sentiment of the market. 

Market indices are of vital importance to investors and traders. Investors use the indices to compare the performances of different listed companies and use them as the foundation for managing their investment portfolios. 

Indexes also provide a more comprehensive view of the overall stock market than one particular sector.

The major stock market indices in India are Nifty and Sensex. 

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What Is Nifty?

The Nifty is the benchmark index of the National Stock Exchange (NSE). The index, which was first formed in 1996, is also known by traders as CNX Nifty and Nifty 50. 

The top 50 firms from a variety of sectors and industries that are listed on the NSE make up the Nifty. The index displays the daily performance of these 50 listed companies. 

The base value of Nifty is 1000, and the *free-float market capitalization-weighted approach is used to calculate it.

*the free-float market capitalization-weighted approach is used to determine a company’s market capitalization by multiplying the price of its stock with the quantity of readily tradeable shares.

What Is Sensex?

The Bombay Stock Exchange's (BSE) benchmark index is called the Sensex. It is also known as the S&P BSE Sensex among traders. 

Found in 1986, it is India's oldest stock index as well as one of the biggest. The Sensex has a base value of 100 and comprises shares from the top 30 well-known corporations.

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What Is The Difference Between Nifty and Sensex?

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To sum up, Nifty and Sensex are two stock exchange indices in India, which influence the capital flow of stocks.  

Nifty is a stock exchange index that tracks the performance of 50 large-cap Indian companies. Whereas, the Sensex is a benchmark index of 30 stocks listed on the Bombay Stock Exchange.