What is Nifty?

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Overview:

The NSE Nifty 50 recently managed to cross the 20,000 mark for the first time.

About Nifty

  • NIFTY is a market index introduced by the National Stock Exchange (NSE).
  • It is a blended word – National Stock Exchange and Fifty coined by NSE.
  • Nifty was established in 1996 with the name CNX Nifty. Further, in 2015, it was renamed Nifty 50.
  • NIFTY 50 is a benchmark-based index and also the flagship of NSE.
  • It represents the performance of the 50 largest and most actively traded stocks listed on the NSE.
  • These 50 largest companies are from different industrial sectors and collectively represent the Stock Market and Economic Trends of India. 
  • It is one of the two main stock market indices in Indiathe other being SENSEX, a product of the Bombay Stock Exchange (BSE).

 

Key Facts about Sensex:

  • Sensex is the benchmark index of the BSE in India.
  • It was launched on January 1, 1986 as a basket of 30 stocks representing the country's largest, financially sound companies listed on the BSE.
  • The term ‘Sensex’ is a blend of the words ‘Sensitive’ and ‘Index’ and was coined by stock market expert Deepak Mohini. 
  • The Sensex reflects the movements in the Indian stock market. It is considered the benchmark index of the Indian stock market. 

 

What is an Index?

  • A stock index is a measurement of the changes that take place in the stock market.
  • It measures price movement and market performance.
  • For creating an index, one has to group some stocks from the list of stocks with similar characteristics.
  • This grouping of stocks can be on the type of industry, total market capitalization or the size of the company.
  • Calculation:
    • To calculate the value of the stock market indexone can use the values of the underlying group of stocks.
    • Any change in the value of underlying stock also leads to a change in the stock index value.
    • If the price of most of the stocks rises, the index will again rise and vice-versa. 
  • Thus, an index is indicative of changes in the market.
  • It reflects the overall market investing sentiment and price movements.

 


Q1) What is the National Stock Exchange (NSE)?

The National Stock Exchange (NSE) is one of the two main stock exchanges in India, with the other being the Bombay Stock Exchange (BSE). The NSE is a prominent and technologically advanced stock exchange, and it plays a crucial role in India's financial markets. It is India's largest financial market and the fourth largest market by trading volume. The National Stock Exchange of India Limited was the first exchange in India to provide modern, fully automated electronic trading.

Source: Nifty conquers 20,000 for 1st time, Sensex closes above 67,000