“What is Sensex and Nifty – Basic beginner guide”
The stocks are the term used to describe the company ownership in the stock market. Through stock, you can claim on company assets and earn as per available stocks with you. Those have more stocks the stake in the company is more, your stake in company shares describe your ownership in the company and it’s earning. Basically, in India, two stock exchanges are there to trade in market is here i.e. BSE and NSE. Each exchange having an index as BSE index is known as Sensex and NSE index is known as Nifty.
What is a stock market?
This is the market place where the company issues the share for trading either through exchanges or through the open counter. But basically in currently each issue comes electronically and trading is also through electronically through the internet with transparency.
As we are discussing Indian market – there is mainly two section of stock market known as Primary market and secondary market. In the primary market first issue of the company comes in the form of IPO which get listed on the secondary market for trading in the second phase. The investor can be individual and corporate level. Through IPO private companies offers to the public on a specified range of initial value to collect money from open market i.e. from the public for the first time for the specified project as mentioned in IPO letter of agreement. After the IPO issues closed the same company gets listed in exchange i.e. BSE or NSE or in both the exchange in the secondary market. From there the trader can take further entry or IPO investor can manipulate the market of exit from the market as price available on the current rate on exchanges or on NSE and BSE.
Short looks on Indian indexes – Nifty and Sensex:
Some of you must listen to Dalal Street, The Mumbai stock exchange is the only biggest stock exchange in India, the building situated on the street is called “Dalal Street”. Dalal means a broker, the name is similar to work the same way as “Wall Street” in the US world famous market. The major stock exchanges in India are Bombay stock exchange (BSE) in Mumbai and the National Stock Exchange (NSE) as along with their indexes is as BSE- Sensex and NSE – Nifty.
Sensex is indexes of BSE 30, in which 30 established and financially strongest companies are listed in Bombay stock exchange (BSE). All these 30 companies will effect on BSE indexes as per own performance in stock market according to trading and assets values. As-
- These 30 companies are selected on the basis of capitalization.
- All 30 companies from different sectors representing large, liquid and representative companies.
- The base year of indexes is 1978-79 and the base values of stocks are 100.
- Sensex ups and down shows the movement of BSE market. His ups and downs are according to these 30 companies performance.
Nifty is indexes for National stock exchange (NSE) – is also a leading stock exchange, having the best trading platform of public choice, located in Mumbai. NSE is established in 1992, is the first demutualized electronic exchange in India.
- NSE become 12th largest stock exchange in worlds, total market capitalization of NSE was the US $1.40 which become more on the current
- NSE offers very transparent business trading with electronically design system across the India.
- Nifty the indexes of NSE 50, means 50 strong performers from the market is listed in this NSE index as per his stack of capitalization in the Indian Nifty become benchmark for Indian stock market by IISL.
- The face values are set to 1000 for this market.
- As Sensex was calculated on the basis of 30 stocks the nifty is calculating on the basis of 50 large and best performer of the companies as listed in Nifty from NSE market.
What is the role of Market Index (Sensex and Nifty)?
- If the index goes up mean the most of the market performer stocks are going up, means people are interested in buying of shares. The actual tendency of the market is upward direction.
- If the index goes down it means the selling pressure is coming in the market, the investors are selling own stocks to book profit or exiting from stocks.
- It also shows portfolio performance.
- Its direction of movement shows the investor sentiments.
- A fund manager who manages the index fund used this as passive movement reading.