The main difference between Sensex and Nifty is that Sensex measures 30 companies traded on the Bombay Stock Exchange (BSE) and Nifty 50 measures 50 companies listed on the National Stock Exchange (NSE).
The Concept of the Difference between Sensex and Nifty
The basic difference between Sensex and Nifty is in the exchanges they cover and the number of companies within them.
Sensex reflects the performance of 30 companies quoted at the Bombay Stock Exchange (BSE), while Nifty 50 is a reflection of 50 companies quoted at the National Stock Exchange (NSE).
Both indices are calculated based on the free float market capitalization method.
Sensex vs Nifty
Sensex is an equity market index which reflects the performance of 30 companies from the Bombay Stock Exchange (BSE).
Nifty 50 is an equity market index which reflects the performance of 50 companies from the National Stock Exchange (NSE).
The major difference between Sensex and Nifty is in the exchanges, the number of companies and base periods of them. Sensex is based on the base period of 1978-1979, while Nifty 50 is based on the base period of 1995.
Despite those differences both indices are calculated according to the same method of free float market capitalization. This method takes into account only shares traded in the open market.
Sensex vs Nifty Comparison Table
| Category | Sensex | Nifty 50 |
|---|---|---|
| Exchange Covered | BSE | NSE |
| Number of Companies | 30 | 50 |
| Base Period | 1978-1979 | 1995 |
| Base Value | 100 | 1000 |
| Index Manager | BSE | NSE Indices Ltd. |
| Methodology | Free-float market capitalization | Free-float market capitalization |
Which One Is Better Between Sensex and Nifty?
Sensex and Nifty are aimed at the same goal and therefore they are not competitors. There are some differences:
- Market Coverage: The number of companies included in the Sensex index is 30, while the number of companies included in the Nifty 50 index is 50
- Diversification: Nifty 50 covers a wider range of companies
- Derivative Market Volume: Derivatives on the Nifty 50 index have usually higher trading volumes
- History: Sensex has a longer history, and therefore a longer period of data analysis is available
Factors Affecting Index Performance
The movement of equity indices depends on many different factors:
- Macroeconomic Factors: The dynamics of inflation, interest rate changes and economic growth may affect the market situation
- Financial Results: Results of financial activity of companies included in the index may affect index movement
- International Situation: Global financial market situation may affect domestic equity market
- Industry Trends: The performance of industry with high weight in the index composition affects index movement
Conclusion
Sensex and Nifty are different groups of companies, traded at different exchanges. Although the number of companies included in the Sensex index is 30, and the number of companies included in the Nifty 50 index is 50, both are widely used to monitor equity market.
Frequently Asked Questions about Sensex and Nifty
Which one is better, Sensex or Nifty?
There is no preference between two indices because both are widely used market indices representing different segments of the broad equity market. The Sensex contains 30 companies and Nifty 50 – 50 companies.
Which index is older, Sensex or Nifty?
Sensex is older index. It was introduced in 1986 and has the base period of 1978-1979. Nifty 50 was introduced in 1996 and has base period of 1995.
Who manages Sensex and Nifty?
Sensex is managed by the Bombay Stock Exchange (BSE). Nifty 50 is managed by NSE Indices Ltd. (a subsidiary company associated with the National Stock Exchange (NSE)).
How can I invest in Sensex and Nifty?
You cannot invest in the index directly. However, you can make your investments in mutual funds or index funds.
What are Sensex and Nifty in simple words?
Sensex and Nifty are the selection of companies which is used to reflect the general performance of the market. They help investors understand whether the market is rising or falling or staying stable over a certain period of time.
Why Sensex is numerically higher than Nifty?
Sensex has different historical base period and base value equals 100. The base period of Nifty 50 is 1995 and base value is 1000. The numerical difference does not mean anything.
How is Sensex calculated?
Sensex is calculated by means of the free float market capitalization method. It takes into account the market value of shares which are traded in the open market and excludes the promoter holdings and other restricted categories.
How is Nifty calculated?
The Nifty 50 is calculated also by means of the free float market capitalization method. The method of calculation of this index takes into account only shares which are traded in the open market. And it excludes the promoter holdings and other restricted categories.
Disclaimer
This content is for educational purposes only and does not constitute investment advice. Market indices and data are subject to change. Please consult a financial advisor before making any investment decisions.
