We all are familiar with these two terms – NSE [National stock exchange] and BSE [Bombay Stock Exchange]. These are the largest and most important stock exchanges in India. Nifty and Sensex both are the indices of these two stock exchanges severally.
Nifty and Sensex work as the primary stock market indices of NSE and BSE. They reflect the economic strength and weakness of the Indian stock market. These indices are constituted by selecting top companies of India. So, the stock price movement in those companies along will represent the Indian market with a single value.
Therefore, these are statistical aggregate to measure how the stock market behaves.
The Nifty and Sensex are two very another important term that needs to be understood before trading in the stock markets. Therefore, let us take a look at these.
- What is Nifty?
- How is Nifty Calculated?
- List of 50 consisting companies of Nifty
- Nifty key Indices
- Quick facts of Nifty 50
- What is Sensex ?
- How to calculate the Sensex?
- List of 30 consisting companies of Sensex
- Quick facts of Sensex
Read also:Stock Exchanges in India – All in 1 List
What is Nifty?
National Stock Exchange Fifty or Nifty is the market index of NSE. So, it means that it is a collection of well established and financially strong 50 companies stocks (presently 51 stocks listed ) that are actively traded in the stock market.
Nifty is also referred to as Nifty 50 and CNX Nifty. This is regulated and owned by India Index Services and Products Ltd. (IISL) which is a subsidiary of NSE.
How is Nifty Calculated?
The free-float market capitalization weighted method is used to calculate Nifty.
Free-float methodology (FFM)
Free-float market capitalization is defined as that proportion of total shares issued by the available company share for trading in the market. It excludes government holding, promoters’ holding, strategic holding, and other locked-in shares. Actually, this type of shares normally does not come to the market for trading for common traders.
So, free-float methodology (FFM) is calculated as below,
FFM = Share Price x (Number of Shares Issued – Locked-In Shares)
So, Nifty follows the above mathematical formula based on the market capitalization. Actually, this is the primary benchmark of NSE. The Index is determined on a daily basis by considering the current market value.
List of 50 consisting companies of Nifty (as of January 2019)
|1.||Adani Ports and Special Economic Zone Ltd.||SERVICES||ADANIPORTS|
|2.||Asian Paints Ltd.||CONSUMER GOODS||ASIANPAINT|
|3.||Axis Bank Ltd.||FINANCIAL SERVICES||AXISBANK|
|4.||Bajaj Auto Ltd.||AUTOMOBILE||BAJAJ-AUTO|
|5.||Bajaj Finance Ltd.||FINANCIAL SERVICES||BAJFINANCE|
|6.||Bajaj Finserv Ltd.||FINANCIAL SERVICES||BAJAJFINSV|
|7.||Bharat Petroleum Corporation Ltd.||ENERGY||BPCL|
|8.||Bharti Airtel Ltd.||TELECOM||BHARTIARTL|
|9.||Bharti Infratel Ltd.||TELECOM||INFRATEL|
|11.||Coal India Ltd.||METALS||COALINDIA|
|12.||Dr. Reddy’s Laboratories Ltd.||PHARMA||DRREDDY|
|13.||Eicher Motors Ltd.||AUTOMOBILE||EICHERMOT|
|14.||GAIL (India) Ltd.||ENERGY||GAIL|
|15.||Grasim Industries Ltd.||CEMENT & CEMENT PRODUCTS||GRASIM|
|16.||HCL Technologies Ltd.||IT||HCLTECH|
|17.||HDFC Bank Ltd.||FINANCIAL SERVICES||HDFCBANK|
|18.||Hero MotoCorp Ltd.||AUTOMOBILE||HEROMOTOCO|
|19.||Hindalco Industries Ltd.||METALS||HINDALCO|
|20.||Hindustan Petroleum Corporation Ltd.||ENERGY||HINDPETRO|
|21.||Hindustan Unilever Ltd.||CONSUMER GOODS||HINDUNILVR|
|22.||Housing Development Finance Corporation Ltd.||FINANCIAL SERVICES||HDFC|
|23.||I T C Ltd.||CONSUMER GOODS||ITC|
|24.||ICICI Bank Ltd.||FINANCIAL SERVICES||ICICIBANK|
|25.||Indiabulls Housing Finance Ltd.||FINANCIAL SERVICES||IBULHSGFIN|
|26.||Indian Oil Corporation Ltd.||ENERGY||IOC|
|27.||IndusInd Bank Ltd.||FINANCIAL SERVICES||INDUSINDBK|
|29.||JSW Steel Ltd.||METALS||JSWSTEEL|
|30.||Kotak Mahindra Bank Ltd.||FINANCIAL SERVICES||KOTAKBANK|
|31.||Larsen & Toubro Ltd.||CONSTRUCTION||LT|
|32.||Mahindra & Mahindra Ltd.||AUTOMOBILE||M&M|
|33.||Maruti Suzuki India Ltd.||AUTOMOBILE||MARUTI|
|35.||Oil & Natural Gas Corporation Ltd.||ENERGY||ONGC|
|36.||Power Grid Corporation of India Ltd.||ENERGY||POWERGRID|
|37.||Reliance Industries Ltd.||ENERGY||RELIANCE|
|38.||State Bank of India||FINANCIAL SERVICES||SBIN|
|39.||Sun Pharmaceutical Industries Ltd.||PHARMA||SUNPHARMA|
|40.||Tata Consultancy Services Ltd.||IT||TCS|
|41.||Tata Motors Ltd.||AUTOMOBILE||TATAMOTORS|
|42.||Tata Steel Ltd.||METALS||TATASTEEL|
|43.||Tech Mahindra Ltd.||IT||TECHM|
|44.||Titan Company Ltd.||CONSUMER GOODS||TITAN|
|45.||UPL Ltd.||FERTILISERS & PESTICIDES||UPL|
|46.||UltraTech Cement Ltd.||CEMENT & CEMENT PRODUCTS||ULTRACEMCO|
|49.||Yes Bank Ltd.||FINANCIAL SERVICES||YESBANK|
|50.||Zee Entertainment Enterprises Ltd.||MEDIA & ENTERTAINMENT||ZEEL|
Nifty key Indices
As like Nifty 50, there are other key indices exist. The above list of Nifty 50 stocks belongs to 12 different sectors of the Indian economy.
Quick facts of Nifty 50
- As on March 31, 2017, the Nifty 50 Index represents about 62.9% of the free float market capitalization of the stocks listed on NSE.
- The base year is taken as 1995. The base value is set to 1000 for Nifty.
Impact cost of the Nifty50 for a portfolio size of Rs.50 lakhs is 0.02% for the month March 2017.
- Nifty 50 is ideal for derivatives trading in the stock market.
- Nifty 50 stocks are selected from topmost companies of different 12 sectors.
What is Sensex?
Sensitive Index or Sensex is the stock market index indicator as well as the benchmark index of the BSE(Bombay Stock Exchange). Sensex also was
How to calculate the Sensex?
Let’s, understand the calculation of Sensex with a simple example. So, assume that the Index consists of only 2 stocks: Stock X and Stock Y.
For instance, company X has 2000 shares in total and 400 shares of them are held by the promoters. Therefore, only 1600 shares are available for trading for the common traders. So, these 1600 shares are called free-floating shares.
Similarly, company Y has 3000 shares in total and 1000 of them are under the government holding or any strategic holding. So, rest of 2,000 are free-floating shares for company Y.
Now, assume that the current market price of stock X is Rs 200.
Total market capitalisation of company X = 2000×200 = Rs 400000
So, free-float market capitalisation of company X =1600×200= Rs 320000
Similarly, suppose the current market price of stock Y is Rs 300
Total market capitalisation of company Y = 3000×300 = Rs 900000
So, free-float market capitalisation of company Y =2000×300=Rs 600000
So, for the current day
Market capitalisation of the index = 400000+900000 = Rs 1300000
Free-float market capitalisation of the index =320000+600000 = Rs 920000
The year 1978-79 is considered as the base year of the index and 100 set as the base value.
Let’s consider the market
Index market cap of 50000 = index-value of 100.
The factor 100/50000 is called index divisor.
Value of the index or Sensex for the current day = Free-float market capitalisation of that day x index divisor = 920000x 100/50000 = 1840
This is how the Sensex is calculated.
List of 30 consisting companies of Sensex (as of January 2019)
|#||Name of the company||Industry Name||Market cap|
|1.||Housing Development Finance Corporation Ltd.||Finance – Housing||Large Cap|
|2.||Cipla||Pharmaceuticals & Drugs||Large Cap|
|3.||State Bank Of India||Bank – Public||Large Cap|
|4.||Dr. Reddys Laboratories Ltd.||Pharmaceuticals & Drugs||Large Cap|
|5.||HDFC Bank Ltd.||Bank – Private||Large Cap|
|6.||Hero MotoCorp Ltd.||Automobile Two & Three Wheelers||Large Cap|
|7.||Infosys Ltd.||IT – Software||Large Cap|
|8.||Kotak Mahindra Bank Ltd.||Bank – Private||Large Cap|
|9.||Lupin||Pharmaceuticals & Drugs||Large Cap|
|10.||Oil & Natural Gas Corporation Ltd.||Oil Exploration||Large Cap|
|11.||Reliance Industries Ltd.||Refineries||Large Cap|
|12.||Tata Steel Ltd.||Steel & Iron Products||Large Cap|
|13.||Larsen & Toubro Ltd.||Engineering – Construction||Large Cap|
|14.||Mahindra & Mahindra Ltd.||Automobiles – Passenger Cars||Large Cap|
|15.||Tata Motors Ltd.||Automobiles-Trucks/Lcv||Large Cap|
|16.||Hindustan Unilever Ltd.||Household & Personal Products||Large Cap|
|17.||Asian Paints Ltd.||Paints||Large Cap|
|18.||ITC Ltd.||Cigarettes/Tobacco||Large Cap|
|19.||Wipro Ltd.||IT – Software||Large Cap|
|20.||Sun Pharmaceutical Industries Ltd.||Pharmaceuticals & Drugs||Large Cap|
|21||ICICI Bank Ltd.||Bank – Private||Large Cap|
|22.||Axis Bank Ltd.||Bank – Private||Large Cap|
|23.||Bharti Airtel Ltd.||Telecommunication – Service Provider||Large Cap|
|24.||Maruti Suzuki India Ltd.||Automobiles – Passenger Cars||Large Cap|
|25.||Tata Consultancy Services Ltd.||IT – Software||Large Cap|
|26.||NTPC Ltd.||Power Generation/Distribution||Large Cap|
|27.||Power Grid Corporation Of India Ltd.||Power Generation/Distribution||Large Cap|
|28.||Adani Ports and Special Economic Zone Ltd.||Port||Large Cap|
|29.||Bajaj Auto Ltd.||Automobile Two & Three Wheelers||Large Cap|
|30.||Coal India Ltd.||Mining & Minerals||Large Cap|
|31.||Tata Motors – DVR Ordinary||Automobiles-Trucks/Lcv||–|
Note: As of 29 Aug 2017, SENSEX constituted of 31 companies as TATA Motors also has DVR in the Sensex 30 list.
Quick facts of Sensex
- The base year of Sensex is 1978-79, and the base value of Sensex is 100.
- The basis of the free float market capitalization 30 companies
areselected for the Sensex 30 from different sectors.
- SENSEX is the most popular index of the Indian stock market.
- So, the purpose of the Sensex is to capture the value movement of the equity market.
Read also:Which is better BSE or NSE?
Both the Nifty and Sensex are stock market index used to determine the value and strength or weakness of the Indian stock market. So, indices used for sorting and comparison of the various companies.
Basically, it is work as a barometer of investor’s sentiments. These two benchmark indices give a general idea about that most of the stocks have gone up or gone down.
NSE is more diversified and has more stocks listed as compared to BSE. Therefore, the intraday traders opt for Nifty as they find it easy to buy or sell as the volume is high and high liquidity.