You may have noticed that the terms Sensex and nifty are often used in connection with the stock market. through this article, we will try to understand what these are and what their applications are.
Stock market indices
The stock market index is an index that shows the overall performance of the stock market. The index shows the price movement that is found through a specific formula by evaluating the performance of a few companies that are performing well in the market.India has two main stock exchanges, the Bombay stock exchange, and the national stock exchange. Both are located in Mumbai.
The Bombay Stock Exchange was established in 1875 and currently has about 5,000 listed companies. The Bombay Stock Exchange is also the largest in Asia.
The index on the Bombay Stock Exchange is called Sensex. Sensex is an index of the top 30 performing companies in the Bombay stock market. Click here to find the list of companies in Sensex.
The national stock exchange was established in 1992 and the first electronic trading system in India was introduced by the national stock exchange. There are currently over 2000 companies listed on NSE.
The index of NSE is called nifty and the nifty moves are based on the price movement of the 50 best-performing companies on the national stock exchange. Click here to find Nifty50 companies.
Uses of the stock market index
1. Performance evaluation
With the help of this index, we can evaluate the performance of the market. It is possible to evaluate the performance of a particular period index and understand what the country's economy was like during that period.2. Benchmarking
The index helps a person investing in the stock market to evaluate the performance of his or her portfolio. Depending on the growth of the index, each investor can evaluate his portfolio performance.Sectoral index
The national stock exchange has indexes for each sector in addition to nifty. The sectoral index helps in understanding the performance of each sector just as it helps in understanding the performance of the nifty market.Examples of Sectoral indices, are Nifty Auto, Nifty Bank, Nifty IT
To find more Click here.