What is NIFTY?
Let us now move forward to the second henchman of national indices, NIFTY.
From what NIFTY is to how it affects the Indian Stock Market, we’ll discuss it all in the upcoming section. Read on!
What is the Definition of NIFTY?
NIFTY, as the name suggests, is the combination of the National Stock Exchange and Fifty. The NIFTY 50 market index is comprised of the top 50 equity stocks traded in the stock exchange (P.S. There are a total of 1600 stocks).
The top 50 stocks in the NIFTY 50 come from the 12 Indian sectors, which include services such as information technology, automobiles, cement products, financial services, consumer goods, entertainment and media, telecommunications, metals, etc.
What is the Origin of NIFTY?
The National Stock Exchange or NSE introduced the NIFTY market index on 21st April 1996. The Indian Index Services and Products (IISL), a subsidiary part of the National Stock Exchange Investment Corporation owns the NIFTY market index and regulates all the functions of the market index.
What’s the Methodology for the Calculation of NIFTY?
While the Sensex is calculated on the Free-Float method, NSE Indices Limited takes use of the float-adjusted and market capitalization-weighted method.
The formula for NIFTY is as follows:
Index value = Current MV or market value / (Base Market Capital * 1000)
For NIFTY, the base period is the 3rd of November, 1995 and the base value is 1000. FYI: the base capital for NIFTY is 2.06 trillion as of now.
The NIFTY share market index is a benchmark standard against which all equity markets in India are measured. Therefore, NSE conducts regular index maintenance to ensure that it remains stable and persists as the benchmark in the Indian stock market context.
Importance and Relevance of the Nifty
As already discussed above, NIFTY 50 is a highly influencing market index with the 50 largest and actively traded stocks of the National Stock Market. Therefore, any fluctuation in the NIFTY 50 index directly affects the Indian economy and stock exchange.
Moreover, like the Sensex, investors,capitalization-weighted and analysts also use the NIFTY market index as a solid benchmark for investments in stocks and mutual funds.
Difference Between Sensex and Nifty
Sensex and NIFTY are probably the top two names on the tongue of every stock investor! However, many people still face a hard time distinguishing the two. While they both are two of the biggest indices in India, there’s a lot that differentiates them. The differences between these two vary from the number of stocks to the authorities holding these indices.
This blog will help you significantly in understanding both the Indian indices and learning what makes them different from each other! All in all, In this blog, we’ll discuss everything you need to know about these two indices.
Read on if you want to know about:
- What is Sensex
- What is NIFTY
- Difference between Sensex and NIFTY
- Similarities between Sensex and NIFTY
So, without any further ado, let’s get started!