What is Nifty & Sensex? Full Guide with Meaning, Example & Role in Market
If you are new to the Indian stock market, you’ve probably heard terms like Nifty and Sensex. But what do they really mean?
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| What is Nifty & Sensex ? |
In this blog, we will deeply explain what Nifty and Sensex are, their full forms, how they work, their differences, and most importantly, why they matter in the Indian economy and market.
What is Nifty?
Nifty stands for NSE Fifty. It is the benchmark index of the National Stock Exchange (NSE) and includes the top 50 companies across sectors.
- Represents top 50 companies listed on NSE
- Covers 13 sectors: Banking, IT, Pharma, Energy, etc.
- Updated every 6 months
- Base Year: 1995, Base Value: 1000
Nifty is a Tradeable F&O Index
Nifty is part of the Futures and Options (F&O) segment. Traders can buy or sell Nifty through derivatives contracts (like Nifty Futures and Nifty Options), which are highly liquid and actively traded.
Example of Top Nifty Companies
- Reliance Industries
- HDFC Bank
- Infosys
- TCS
- ICICI Bank
If Nifty is at 22,000 points, it means the average value of these 50 companies has increased significantly compared to 1995.
What is Sensex?
Sensex stands for Sensitive Index. It is the benchmark index of the Bombay Stock Exchange (BSE) and includes 30 large-cap companies.
- Represents top 30 companies across major industries
- Oldest stock index in India
- Base Year: 1978-79, Base Value: 100
Sensex is also a Tradeable F&O Index
Just like Nifty, Sensex is also available for F&O trading. Investors and traders use Sensex Futures and Options to hedge or speculate on market movement.
Example of Sensex Companies
- TCS
- Larsen & Toubro
- HUL
- SBI
- Bharti Airtel
If the Sensex is at 74,000 points, it reflects a strong average performance of these companies since the base year.
Nifty vs Sensex: Key Differences
| Feature | Nifty | Sensex |
|---|---|---|
| No. of Companies | 50 | 30 |
| Exchange | NSE | BSE |
| Base Year | 1995 | 1978-79 |
| Base Value | 1000 | 100 |
| F&O Available | Yes | Yes |
Why Do We Need Nifty & Sensex?
- They are the barometers of the Indian economy.
- Used as a benchmark to check the market trend.
- Help mutual funds and investors to measure portfolio performance.
- Basis for F&O trading strategies.
- Used by FIIs, DIIs, and analysts to make investment decisions.
Real-Life Example
Suppose Nifty was at 8,500 in April 2020. In June 2025, it’s at 22,000. This growth shows a rising market trend. If you had invested ₹1 lakh in a Nifty index fund in 2020, your investment would have grown significantly.
FAQs – Frequently Asked Questions
Q1. Can I invest directly in Nifty or Sensex?
You cannot buy the index directly, but you can invest in them via Index Funds or ETFs.
Q2. Which is better – Nifty or Sensex?
Both are reliable. Nifty is broader (50 stocks), Sensex is older (30 stocks). Choose based on your strategy.
Q3. Do Nifty and Sensex always move together?
Yes, mostly. Both track top companies. Their trends are usually similar, though minor differences can occur due to stock weightages.
Related Posts
- What is Share Market and How Does the Stock Market Work
- Best Nifty Index Funds to Invest in 2025
- What Are Large Cap, Mid Cap & Small Cap Stocks?
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