Definition of Sensex
Sensex is the abbreviation of Bombay Exchange Sensitive Index. It was started on 1 January, 1986. The term ‘Sensex' was given by an IIT graduate, Deepak Mohoni, who was a stock market analyst of India. It consists of those top thirty companies which are actively traded stocked on Bombay Stock Exchange (BSE). Calculations are made on the basis of free-float capitalization technique. The figure provided by sensex shows the relative prices of shares of such companies. It is considered as heartbeat of local stock markets of our nation. In simple language, it can be called as ‘Index' or ‘Indicator' of performance of companies listed at BSE. When sensex is up, then it means that stock price of such companies have gone up or increased. On the other hand, when sensex falls down, then it means that stock price have falled down or decreased.
What is Nifty
Nifty word is made from N+ fifty. Nifty 50 indicates main companies of National Stock Exchange's Fifty. It shows the index computed by the performance of top stocks listed on National Stock Exchange.
Difference between Sensex and Nifty.
However, the purpose of both Sensex and Nifty is similar, i.e. to tell the position of stock market.
Definition of Sensex
What all you explained is correct , just one correction. Nifty is the index of NSE(National Stock Exchange) and NSE as well is situated in Mumbai as is BSE(Bombay Stock Exchange).
BSE is situated at Dalal Street(Hutatma Chowk earlier Flora Fountain Area).
NSE is situated in BKC(Bandra Kurla Complex).
The Sensex is like directory of Index with alphabetic arrangement of list of the company which may be varies in different fields. The basic question that individual user should know about an index? Index is essentially a display. It provides you a universal idea in relation to stock market and whether the majority of the reserve stock have moved out up or down.
The Sensex is act as the pointer of all the chief companies of the BSE. While Nifty is act as the pointer of all the chief companies of the NSE.
Suppose Sensex move to top position, this means it is one the way that the prices of the stocks of BSE major companies have rise up. If the Sensex move to down position, which says you that the stock price of BSE major companies have fall down.
Similar was as Sensex symbolize the peak stocks of the BSE, the Nifty symbolize the peak stocks of the NSE.
Suppose if someone puzzle between BSE or NSE, the BSE (Bombay Stock Exchange) and the NSE (National Stock Exchange). The BSE is located in Bombay and the NSE is located at Delhi. The foremost stock exchanges of India. There are other stock exchanges like the Calcutta Stock Exchange etc. but they are not as accepted as the BSE and the NSE. For the most part of the stock trading for the country is to be completed through the BSE & the NSE.
Apart from Sensex and the Nifty there are a lot of indexes. They are act as the directory that gives individual suggestion in relation to whether the mid-cap stocks will move up and down (is called the “BSE Mid-cap Index"). There is an directory for the metal stocks. There is a directory for the FMCG stocks. There is an index for the automobile stocks also and many more. If you are interested in knowing how the SENSEX is actually calculated. You must investigate "How to compute BSE SENSEX?" article! But, try to understand "How to make money in the stock market?"
Both indices are computed based on the free float methodology, which means only actively traded shares of each constituent are considered for computing the index. Promoter held shares are excluded from index computation. The free float factors for each index constituent are provided by the BSE and NSE for the sensex and nifty respectively. The nifty has 50 individual companies from over 20 different sectors, while the sensex has 30 companies.
Every country share market has there INDEX which shows the economy growth and investment opportunity available.
Similarily Indian equity amrket ahs many Index.
Like sensex, nifty, bank nifty, cnx it, cnx infra etc.
But mostly popular is sensex and nifty.
Sensex contains 30 shares and nifty contains 50 shares from different sector.
In nifty there are stocks from Banks, oil and gas companies, cement, auto mobile, infra structure,Information technology etc.
All together shows the index which indicate whether Indian economy is growing or not?
So as a new trader it is always suggested to avoid trading in NIFTY or SENSEX as it is average of some big companies performance.
Those index is combination of some shares and every share has there own weightage on this index.
In NIFTY Reliance Industries and TCS having maximum weightage.
If these two share goes up then NIFTY will definitely go up .