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Nifty vs Sensex: Difference between Sensex and Nifty

•6 min read•by Angel One
Sensex and Nifty are India's primary market benchmark indices; the Sensex or BSE Sensex tracks 30 stocks, while the Nifty tracks 50. They assist in identifying patterns, comparing market movements, and assessing sentiment.
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Understanding the Indian stock market direction starts with looking at two major Indian indices - Nifty and Sensex. These two benchmarks track the performance of leading companies and reflect overall market sentiment. The Sensex tracks the performance of 30 prominent stocks, while the Nifty tracks 50 actively traded firms. Together, they help investors gauge trends, assess market strength, and interpret broader economic shifts with clarity. 

Key Takeaways

  • Nifty tracks 50 companies, while Sensex tracks 30. 

  • Both indices help investors understand market direction and sentiment. 

  • Each uses free-float market capitalisation to reflect real-time movements. 

  • Comparing them helps investors judge trends and market behaviour clearly. 

What is an Index?

The statistical aggregate that measures change, such as market performance or price movement is the index. Based on specific market characteristics, market indices calculate or measure the value of a portfolio of holdings, and investors use the market indices to compare performance, and use them as the basis for managing their investment portfolios. There are two large cap indices in the Indian stock market, which are the S&P BSE Sensex, and the S&P CNX Nifty. On the basis of performance of both the indices, one can measure the changes in the market.

What are Nifty and Sensex? 

When investors track the overall strength and direction of the Indian stock market, the two benchmark indices they rely on most are Nifty and Sensex. These indices act as barometers of market sentiment by reflecting how leading companies are performing. 

Nifty represents 50 major stocks traded on the National Stock Exchange and is calculated using the free-float market capitalisation method, which focuses only on the portion of shares available for public trading. Its base value is 1000, and the index adjusts continually as prices and market weights change. 

Sensex, on the other hand, captures the performance of 30 prominent companies listed on the Bombay Stock Exchange. It also uses an free-float market capitalisation approach but is anchored to a base value of 100. The index moves in line with the combined market value of its constituents, offering a clear picture of how established, large-cap stocks are behaving. 

Together, Nifty and Sensex help investors observe trends, evaluate portfolio performance, and understand how shifts in economic conditions influence broader market movements. 

Difference Between Sensex and Nifty 

Sensex and Nifty are stock market indices, which are used to depict the strength of the stock market. While both are calculated in almost the same method, there are a few differences between the two market indices. 

  1. The name 'Nifty' is derived from a combination of 'National' and 'Fifty’, Sensex is derived from ‘Sensitive Index’. 

  1. Sensex is operated by the Bombay Stock Exchange (BSE), while Nifty is managed by NSE Indices Limited, a subsidiary of the National Stock Exchange (NSE). 

  1. Nifty consists of 50 selected stocks from the top 50 companies, which are used to determine the index, while Sensex consists of 30 stocks selected from the top 30 companies, which are used to determine the index. 

  1. The base index value of Nifty is 1000, while the base index value of Sensex is 100. 

Also Read, Difference between NSE and BSE 

Sensex vs Nifty 

Parameter 

Sensex 

Nifty (Nifty 50) 

Full Name 

S&P BSE Sensex 

NSE Nifty 50 

Ownership 

Managed by Asia Index Pvt Ltd (a BSE & S&P Dow Jones venture) 

Owned and managed by NSE Indices 

Index Composition 

Represents 30 large companies 

Represents 50 large companies 

Stock Exchange 

Traded on the BSE (Bombay Stock Exchange) 

Traded on the NSE (National Stock Exchange) 

Base Year 

1978-79 

1995 

Base Value 

100 

1,000 

Calculation Method 

Free-float market capitalisation-weighted index 

Free-float market capitalisation-weighted index 

Weighting Method 

Market capitalisation-weighted, based on free-float shares 

Market capitalisation-weighted, based on free-float shares 

Sector Exposure 

13 major sectors 

24 sectors 

Factors That Affect the Performance of an Index 

Sensex and Nifty are sensitive to the changes in the economy. When the economy is booming, it gets reflected in the superior performance of the stock market, and the indices will be upward. Several macroeconomic factors, therefore, influence the performance of indices. 

  • Change in rate of interest: The interest rate and the stock market move in opposite directions. When the interest rate goes up in the economy, lending becomes costlier. To compensate for this, companies reduce their expenses, which puts pressure on stock performance. As a result, indices fall. 

  • Inflation: Rising inflation depicts a situation in which the value of money experiences a steep fall. 

  • When inflation is high, investors have little surplus funds to invest, and companies also suffer because of the overall rising cost in the economy. It causes the stock market to fall. 

  • Global economy: Global economic and political ups and downs are also responsible for fluctuating Sensex and Nifty. For example, a recession in the global market will also impact the performance of Indian indices. 

Nifty or Sensex: Which to Choose?  

Choosing between Nifty and Sensex depends on whether an investor prefers a broader market view or a more concentrated one. You can consider Nifty 50 as a broader benchmark, providing diversified exposure across 50 large-cap companies and various sectors. In contrast, the Sensex acts as a more concentrated pulse of the market by tracking 30 of the most established, high-influence firms.  

Simply put, if you prioritize maximum diversification and follow where the institutional money is flowing (high derivative liquidity), focus on the Nifty 50. However, if you prefer a highly concentrated portfolio of just the top 30 legacy companies and value the index with the longest historical data (dating back to 1979), you can lean towards the Sensex. 

Conclusion

Nifty and Sensex are two of the major stock market indices in India. Both Nifty and Sensex depict the strength of the stock market and have many similarities. However, the key difference between Sensex and Nifty is that Nifty is designed to measure the performance of 50 top companies, while Sensex has been designed to measure the performance of 30 well-established companies. Furthermore, the base value of the index for Sensex is 100, while the base index value of Nifty is 1000. 

FAQs

Sensex and Nifty are the benchmark indices of BSE and NSE, respectively. Nifty comprising 50 stocks is a broader index than Sensex, which contains top 30 performing stocks. Hence, Sensex is more niche. So, when the market is bullish, the top companies perform better, pushing Sensex higher. If you compare only the data, then Sensex has performed better than Nifty, which has a broader base of 50 companies
Sensex and Nifty are both benchmark indices, indicating overall stock market performance, comprise of the most liquid, top company stocks. Nifty is calculated on top 50 stocks trading in the National Stock Exchange, when Sensex, also called S&P Sensex, comprises top 30 large-cap company stocks in Bombay Stock Exchange.
Sensex is calculated on the top 30 large-cap company stocks trading in BSE. Nifty consider a much broader base to include the top 50 trading stocks, and hence, is more diversified. Because of the broader base, the value of Nifty is often less than Sensex. Apart from that, both indices measure overall market performance, indicate market movement, and allow investors to compare, and use them as a basis to measure portfolio performance.
Sensex stands for sensitive index, which is the market index of the Bombay Stock Exchange. Nifty is the index for National Stock Exchange, also called Nifty 50 because it is based on the top 50, highly traded companies.

Nifty and Sensex are indices in the Indian stock market that monitor the overall performance of specific stocks. Both employ a Free-Float Market Capitalization-Weighted methodology, meaning the movement of larger, more liquid companies has a greater impact on the index value. Nifty represents the top 50 companies on the NSE, while Sensex represents the top 30 companies on the BSE.  

Whether the Sensex outperforms the Nifty or vice versa is determined by a variety of factors including human preferences. Both indexes are important benchmarks in the Indian stock market, reflecting various stock exchanges (BSE for Sensex and NSE for Nifty) and a diverse range of firms. Investors frequently make decisions based on personal preferences, sectoral focus, liquidity, and past performance. Before deciding which index is best for you, evaluate your investing strategy's unique requirements, risk tolerance, and the industries you want exposure.  Additionally, professional financial advice can be valuable in making informed decisions.

Sensex is older, launched in 1986, while Nifty was introduced in 1996. Together, Nifty and Sensex have become the key benchmarks for tracking India’s market performance. 

Sensex is overseen by BSE Ltd., which manages its methodology and updates. Nifty is managed by NSE Indices, which is responsible for maintenance and periodic rebalancing. 

Both indices use free-float market capitalisation to track the movement of selected large companies. When constituent stock prices change, the index value rises or falls accordingly. 

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