Why are they called 'Sensex' and 'Nifty' and how are they different?

 

Let us know what is 'Sensex' and what is its equivalent called 'Nifty' according to Pranjal Kamra, Chief Executive Officer (CEO) of Finology? To know this, let us first understand what indices are.

What is index?

*An index is a standardized format for tracking market performance. It includes a group of shares traded on a particular exchange (such as BSE or NSE) that replicates a particular area of ​​market activity. Such indices can be either B (broad-based), such as the Sensex and Nifty, or they can be more specific, such as the Bank Nifty or BSE Auto index. In other words, Sensex reflects the market conditions of BSE while Nifty reflects the market conditions of NSE.

Why are they called 'Sensex' and 'Nifty' and how are they different?

*Being benchmark indices, both Sensex and Nifty track broad-based market dynamics. Sensex is a short form of 'BSE Sensitive Index', whereas Nifty is a short form of NSE Fifty. 

The biggest noticeable difference between Sensex and Nifty is the number of stocks that trade on them. Sensex is a benchmark index consisting of a total of 30 stocks. Nifty 50, as its name suggests, is an index consisting of a total of 50 stocks.

Formation date and base year

*The Sensex was launched on January 1, 1986 with a base year of 1978-79. Initially with full-market capitalization method Nifty was launched on 22 April 1996. This was changed to the free-float methodology on 26 June 2009. Its base period is November 3, 1995.

 Sensex is governed by BSE and Nifty is governed by NSE.