What is Sensex and Nifty ?
Whenever you hear people talking about stock Market in general terms like "stock market crashed today", "stock market is in the Bull run", "Bull Market vs Bear Market", what they are actually referring is BSE SENSEX and NSE NIFTY !
What is sensex and Nifty ?
Sensex and Nifty are two different indexes created by the two Indian stock market exchange BSE and NSE. Each stock market has its own way of creating its index, SENSEX (Stock Exchange Sensitive Index) created by BSE consists of 30 stocks in various industries while NIFTY (National Stock Exchange Fifty) created by NSE consists of 50 stocks in various industry.
Since each company in index is considered one of the leaders in its own industry, strangely, index is thus related to economy ! If the company or index is rising people consider this as economy of India rising and vice versa.
Why was Sensex and Nifty created ?
At the time of writing, BSE had more than 4000 and NSE more than 1700 actively traded shares of company. Calculating the progress of each stock daily to know the movement and performance of the stock market will not only be time consuming but impractical.
So each stock exchange decided their own unique way to pick some of listed companies as a representative from its respective industries.
Below table gives Nifty and Sensex index constituents.
| No | Company | ISIN | SENSEX | NIFTY |
|---|---|---|---|---|
| 1 | Asian Paints Ltd | INE021A01026 | YES | YES |
| 2 | Axis Bank Ltd | INE238A01034 | YES | YES |
| 3 | Bajaj Finance Ltd | INE296A01024 | YES | YES |
| 4 | Bajaj Finserv Ltd | INE918I01018 | YES | YES |
| 5 | Bharti Airtel Ltd | INE397D01024 | YES | YES |
| 6 | Dr Reddy's Laboratories Ltd | INE089A01023 | YES | YES |
| 7 | HCL Technologies Ltd | INE860A01027 | YES | YES |
| 8 | HDFC Bank Ltd | INE040A01034 | YES | YES |
| 9 | Hindustan Unilever Ltd | INE030A01027 | YES | YES |
| 10 | Housing Development Finance Corporation | INE001A01036 | YES | YES |
| 11 | ICICI Bank Ltd | INE090A01021 | YES | YES |
| 12 | IndusInd Bank Ltd | INE095A01012 | YES | YES |
| 13 | Infosys Ltd | INE009A01021 | YES | YES |
| 14 | ITC Ltd | INE154A01025 | YES | YES |
| 15 | Kotak Mahindra Bank Ltd | INE237A01028 | YES | YES |
| 16 | Larsen & Toubro Ltd | INE018A01030 | YES | YES |
| 17 | Mahindra & Mahindra Ltd | INE101A01026 | YES | YES |
| 18 | Maruti Suzuki India Ltd | INE585B01010 | YES | YES |
| 19 | Nestle India Ltd | INE239A01016 | YES | YES |
| 20 | NTPC Ltd | INE733E01010 | YES | YES |
| 21 | Power Grid Corp of India Ltd | INE752E01010 | YES | YES |
| 22 | Reliance Industries Ltd | INE002A01018 | YES | YES |
| 23 | State Bank of India | INE062A01020 | YES | YES |
| 24 | Sun Pharmaceutical Industries Ltd | INE044A01036 | YES | YES |
| 25 | Tata Consultancy Services Ltd | INE467B01029 | YES | YES |
| 26 | Tata Steel Ltd | INE081A01012 | YES | YES |
| 27 | Tech Mahindra Ltd | INE669C01036 | YES | YES |
| 28 | Titan Co Ltd | INE280A01028 | YES | YES |
| 29 | UltraTech Cement Ltd | INE481G01011 | YES | YES |
| 30 | Wipro Ltd | INE075A01022 | YES | YES |
| 31 | Adani Ports | INE742F01042 | NO | YES |
| 32 | Bajaj Auto | INE917I01010 | NO | YES |
| 33 | Bharat Petroleum Corporation Limited | INE029A01011 | NO | YES |
| 34 | Britannia | INE216A01030 | NO | YES |
| 35 | Cipla | INE059A01026 | NO | YES |
| 36 | Coal India | INE522F01014 | NO | YES |
| 37 | Divis Laboratories | INE361B01024 | NO | YES |
| 38 | Eicher Motors | INE066A01021 | NO | YES |
| 39 | Grasim | INE047A01021 | NO | YES |
| 40 | HDFC Life | INE795G01014 | NO | YES |
| 41 | HERO Motocorp | INE158A01026 | NO | YES |
| 42 | Hindalco | INE038A01020 | NO | YES |
| 43 | Indian Oil Corporation | INE242A01010 | NO | YES |
| 44 | JSW Steel | INE019A01038 | NO | YES |
| 45 | ONGC | INE213A01029 | NO | YES |
| 46 | SBI Life Insurance | INE123W01016 | NO | YES |
| 47 | Shree Cement | INE070A01015 | NO | YES |
| 48 | TATA Consumer Products | INE192A01025 | NO | YES |
| 49 | TATA Motors | INE155A01022 | NO | YES |
| 50 | UPL LIMITED | INE628A01036 | NO | YES |
Detailing about the calculation of Index is beyond the scope of this share market tutorial and mostly futile for general investor. Practically, the rise of Sensex or NIFTY has nothing to do with your actual stock portfolio. Many times the stock market is declining while your portfolio rises and vice versa.
A value investor always check the fundamentals of company, does financial statement analysis, knows how to value stocks and is never affected by rise or fall of Sensex or NIFTY. (Plz read Stock Trading vs Stock Investing and Fundamental Analysis vs Technical Analysis)
There are many experts who predict where the index will go in coming years. I can assure you, after 15 years of investing and learning, I think nobody can tell you where the Sensex and NIFTY will be accurately, it is just a wild guess told mostly to create a sense of authority !
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