In this post, I am going to tell you about What is Sensex and Nifty.
Have you ever heard about Dalal street? 'Dalal Street' in Mumbai,India is the address of Bombay Stock Exchange (BSE), the biggest Stock Exchange in India. When BSE was moved to this new location at the intersection of Bombay samachar marg and hum hum street. The street next to the building was named as Dalal street. Dalal means 'Broker' in english. 'Dalal Street' in India is similar to 'Wall street' in US.
What is Nifty and Sensex?
In order to understand what is Nifty and Sensex, you first need to understand about the Indian Stock exchanges. Let's discuss the two major Stock Exchanges in India, BSE and NSE along with their indexes.
Bombay Stock Exchange is located in Mumbai, India. It was established in 1875 and is India's Oldest Stock Exchange. It is world fastest Stock exchange with Immediate trend speed of 6 microseconds. BSE is world's 11th Largest stock exchange. More than 5500 companies are publically listed on BSE.
SENSEX also called as BSE 30 is the market index consisting of 30 well established and financially sound companies listed in BSE. 30 companies are selected on the basis of free float market capitalization. These are different companies from different sectors representing the sample of large liquid and representative companies. The base year of Sensex -(1978-79) and base value is 100. Sensex is the indicator of Market movement. If Sensex go up, it means that most of the Stocks in BSE in India went up during that period of time. If the Sensex goes down, this tells you that stock price of most of the major stocks has gone down. For example, suppose Sensex is 26,000 today, if Sensex drops to 25.950 tomorrow, it means that the majority of the 30 companies financial condition is not that good and it's share prices falling.
National Stock Exchange is the Leading Stock exchange in India located in Mumbai, Maharashtra. It was started to end the monopoly of the BSE in the Indian market. NSE was established in 1992 as The first demutualized electronic exchange in India. It is World's 12th largest stock exchange. NSE's index NIFTY is used extensively by indicators in India and around the world as the parameter of Indian's capital market.
NIFTY is the NSE of India's stock Market exchnage for Indian Equity Market. NIFTY is owned and managed by India Index Service and Products(IISL). It's Base year is 1995 and base value is 1000. Nifty is calculated on 50 Stocks actively traded in the NSE. 50 top Stocks are selected from different sectors. With respect to Nifty and NSE, we can say that if Nifty goes up this means that stock Prices of most of the major stocks of NSE has gone up. If NIfty goes down, this tells you that stock prices of most of the major stocks of NSE has gone down.
The SENSEX and NIFTY are both indicators of Market movement. If the Sensex or Nifty goes up it means that most of the stocks in India went up during that period of time. When Sensex/ Nifty goes up, it shows economic growth in the country.
Importance of Market Index:
- Market Index are Barometer for the market behaviour.
- It gives a general idea what whether the most of the stocks has gone up or gone down.
- It is used as the benchmark portfolio performance.
- It is used as a reflector of investors sentiments.
- It is used for sorting and comparison of the various companies.
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