Tue. Nov 19th, 2019

What is NIFTY and how is it different from SENSEX?

What is NIFTY and how is it different from SENSEX?

Have you ever heard of what is Nifty? Have you ever noticed that a lot of people keep talking about nifty? But you do not understand his words because you do not know what is nifty. So today we will provide you all the information related to nifty through this post. NIFTY different from SENSEX

When there is a matter related to the share market, then the name of nifty is definitely taken. We often hear that nifty went up by so many points today or nifty closed down by so many points. Why nifty went up or why it came down today, we will know what effects can be read on the market due to the downward movement of nifty, so let’s start with what is nifty.

What is nifty?

The nifty full form is National Stock Exchange Fifty. It is a word consisting of two words National and Fifty. It is also called Nifty50, but usually, most people use it by the name of Nifty.

Nifty is an important Benchmark of the National Stock Exchange of India. It is an index of 50 major shares listed on the National Stock Exchange. It monitors the shares of 50 major companies in the country. And in it, only 50 shares of the company can be seen.

It also takes care of those 50 shares which are listed in their prices or the slowdown in their prices and also provides information about them. nifty50 is the most prominent and important stock index of India. This is the highest trend in the country. BSE is the SENSEX at number two.

Simply put, Nifty is a stock index that indexes the stocks of 50 main companies. Stocks of more than 50 companies cannot be listed in NIFTY.
50 companies from 12 different sectors are indexed in NIFTY.

What is the work of NIFTY

The job of Nifty is to provide us information about those 50 companies and the market.

Nifty tells us that the companies whose shares are listed, how the company is working, if the company is doing good work, then its direct effect is seen in the price of the company’s shares and the shares of that company increase. And when the shares of a listed company go up or increase, then due to this, the Nifty also increases.

In the same way, if the companies listed in the index are losing profit or not, then it also directly affects the shares of that company and the prices of the shares start to decrease. And when the price of shares declines, the decline in Nifty can be seen.

NIFTY and Economy

Now you must be thinking of what can be the relation between NIFTY and economy. So we would like to tell you that NIFTY and the economy of the country have a deep connection.

Like the Nifty going up tells us that a company is making a good profit and making a profit. Similarly, when the company is doing good work and earning good money, then the economy of the country is also doing good work behind it. Because the more Indian companies will gain capital, the more tax will be added to the Indian economy, which will make India’s economy stronger somewhere or the other.

In a way, NIFTY not only gives us information about the boom and slowdown in the shares of the company, along with it, we also explain what is the movement of the entire market. If anyone wants to understand the movement of the market, then they should understand NIFTY.

How is NIFTY made?

How NIFTY is formed or how it is calculated means calculating the shares of those 50 listed companies. Where only 50 companies are listed in the Nifty, around 6000 Companies are listed in the NSE. Now out of those 6000 companies, 50 largest companies are kept in Nifty so that the market moves can be estimated.

The shares of 50 companies listed in NIFTY are bought or sold the most. These 50 companies listed in Nifty are selected from different sectors. These are the biggest companies in their region. Their market capitalization is about 60% of the entire market. Whenever the shares of these companies start buying more, then NIFTY starts going up and when the recession comes, the Nifty stops or it starts coming down.

There is an index committee to select 50 companies listed in the Nifty, this committee includes big economists, etc.

What is the difference between NIFTY and SENSEX

Both the Nifty and the Sensex are sensory indices of the stock index. But there is some difference between the two which makes them different from each other and one is better than the other. Let’s know what is the difference between SENSEX and NIFTY- Nifty is part of the National Stock Exchange whereas SENSEX is part of the Bombay Stock Exchange.

While only 30 companies are listed within another BSE ie Bombay Stock Exchange, 50 companies are listed under NIFTY. Therefore, the Nifty has been considered more reliable for the stock market. 50 companies will be able to assess market capitalization in comparison to 30 companies to show a more real market situation.

The work of both is the same. Both are indices and both have a real motive to tell the state of the stock market.

Benefits of NIFTY

As such, there are many benefits of NIFTY, but some of the major advantages which are required to be in your knowledge are as follows-

  1. To know about the performance of NSE, what kind of work NSE is doing.
  2. Easily get information about the going on in the market or the rapid and slowdown in the market. If NIFTY goes down, then the market is going to slow down. The exact movement of the market can be estimated through the Nifty.
  3. Through NIFTY, we get information about the country’s economy easily. We come to know that if the market is booming and the NIFT is going upwards, then it means that the country’s economy is also going upwards.

But if you see any deficiency in our post, please give your opinion in the comment box and help us to correct that deficiency, thank you.

Check out our previous post – How to stock price increase and decrease in the stock market?

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