What are the Nifty 50 And Sensex? Difference Between Them

What are Nifty 50 And Sensex? Difference Between Them

What are Nifty and Sensex? Are these acronyms one and the same? No, of course not. The terminology of these two indices differs, so we need to understand the difference between them before diving into their values.

First, we need to know what is Nifty 50 and what is Sensex.

What is Nifty 50?

The Nifty 50 is a benchmark Indian stock market index that defines the weighted average of 50 of the selected large Indian companies listed on the National Stock Exchange. It is one of the most followed benchmark indices in the Indian stock market.

Nifty 50 is managed and run by NSE Indices, which is a wholly-owned subsidiary of the National stock exchange (NSE) Strategic Investment Corporation Limited.

It was launched on 22 April 1996 and as of now, it is one of the most traded derivative instruments in the future and options segment.

Components of Nifty 50

In the below table, you can find components of Nifty 50, sector, and their weightage on the index.

SR NO.COMPANY NAMESECTORWEIGHTAGE
1RELIANCE INDUSTRIES LTDPETROLEUM PRODUCTS11.70%
2HDFC BANK LTDBANKS8.61%
3INFOSYS LTDSOFTWARE6.90%
4HOUSING DEVELOPMENT FINANCE CORPORATION LTDFINANCE5.81
5ICICI BANK LTD.BANKS7.93%
6TATA CONSULTANCY SERVICES LTDSOFTWARE4.24%
7KOTAK MAHINDRA BANK LTDBANKS3.55%
8HINDUSTAN UNILEVER LTDCONSUMER NON-DURABLES3.03%
9AXIS BANK LTDBANKS2.89%
10LARSEN TOUBRO LTDCONSTRUCTION PROJECTS3.08%
11ITC LIMITEDCONSUMER NON-DURABLES3.64%
12STATE BANK OF INDIABANKS2.66%
13BAJAJ FIANANCE LTDFINANCE2.30%
14ASIAN PAINTS LIMITEDCONSUMER NON-DURABLES1.82%
15BHARTI AIRTEL LTDTELECOM- SERVICES2.27%
16HCL TECHNOLOGIES LTDSOFTWARE1.30%
17MARUTI SUZUKI INDIA LTDAUTO1.54%
18TATA STEEL LTDFERROUS METALS1.13%
19WIPRO LTDSOFTWARE0.79%
20ULTRA TECH CEMENT LIMITEDCEMENT AND CEMENT PRODUCTS1.02%
21MAHINDR & MAHINDRA LTDAUTO1.53%
22BAJAJ FINSERV LTDINSURANCE1.20%
23SUN PHARMACEUTICAL INDUSTRIES LTDPHARMACEUTICALS1.26%
24TITAN COMPANY LTDCONSUMER DURABLES1.30%
25TECH MAHINDRA LTDSOFTWARE0.87%
26DR. REDDYS LABORATORIES LTDPHARMACEUTICALS0.67%
27JSW STEEL LTDFERROUS METALS0.75%
28NESTLE INDIA LTDCONSUMER NON-DURABLES0.91%
29INDUSIND BANK LTDBANKS0.80%
30TATA MOTORS LTDAUTO1.03%
31POWER GRID CORPORATION OF INDIA LTDPOWER1.01%
32GRASIM INDUSTRIES LTDCEMENT AND CEMENT PRODUCTS0.78%
33HDFC LIFE INSURANCE COMPANY LTDINSURANCE0.78%
34DIVIS LABORATRIES LTDPHARMACEUTICALS0.60%
35NTPC LTDPOWER1.05%
36HINDALCO INDUSTRIES LTDNON-FERROUS METALS0.77%
37BAJAJ AUTO LIMITEDAUTO0.61%
38ADANI PORTS & SPECIAL ECONOMIC ZONETRANSPORTATION0.90%
39CIPLA LTDPHARMACEUTICALS0.73%
40TATA CONSUMER PRODUCTS LIMITEDCONSUMER NON-DURABLES0.66%
41SBI LIFE INSURANCE COMPANY LTDINSURANCE0.76%
42BHARAT PETROLEUM CORPORATION LTDPETROLEUM PRODUCTS0.43%
43UPL LTDPESTICIDES0.52%
44BRITANNIA INDUSTRIES LTDCONSUMER NON-DURABLES0.58%
45OIL & NATURAL GAS LIMITEDOIL0.66%
46EICHER MOTORS LTDAUTO0.58%
47HERO MOTOCORP LTDAUTO0.48%
48ADANI ENTERPRISESMICS.0.30%
49COAL INDIA LTDMINERALS\MINNING0.66%
50APPOLO HOSPITALS ENTERPRISES LTDPHARMACEUTICALS0.90%

Eligibility Criteria For Listing in Nifty 50 Index

The eligibility criteria for listing in the Nifty 50 index are:

  • The company’s share must be registered with the National Stock Exchange (NSE).
  • The company’s stock should have had 100% trading frequency in the last six months.
  • Stocks having differential voting rights can be the part of Nifty 50 subjected to several conditions.
  • stocks must be highly liquid that can be measured by their average impact cost.
  • The company should be allowed to trade in futures options.

The nifty 50 index gets reconstituted after every 6 months time period, based on the performance of the stock and based on fulfilling the eligibility criteria when the elimination or inclusion of old or new stock is done.

The reconstitution may be done when a company goes through a corporate action like mergers, acquisitions, etc. The screening of the companies may also be done quarterly as per the market regulator SEBI’s regulations. [Source]

How Nifty 50 is Calculated?

The NIFTY 50 is calculated employing a float-adjusted, market capitalization-weighted methodology,
wherein the level of the Nifty 50 index reflects the total market capitalization of all the shares in the index relative to a particular base period.

The calculation methodology also takes into account constituent changes in the index and corporate actions like stock splits, rights issuance, etc without affecting the index value.

What is Sensex?

The BSE SENSEX earlier known as the S&P Bombay Stock Exchange Sensitive Index is a free-float market-weighted stock market index of 30 well-established and financially stable companies listed on the Bombay Stock Exchange (BSE).

The 30 component companies which are some of the biggest, most liquid, and actively traded stocks are representative of different industries of the Indian economy. The index was started on 1 January 1986, and it is regarded as the pulse of the domestic stock markets in India.

The benchmark index has increased by over twenty-five times from June 1990 to the present. Using information from April 1979 onwards, in the long-run S&P BSE SENSEX works at a compounding return of 18.6% per annum.

Components of Sensex

SR NO.COMPANYINDUSTRYWEIGHTAGE(%)
1RELIANCE IND.ENERGY12.5
2ICICI BANKBANKING9.4
3HDFC BANKBANKING9.0
4INFOSYSSOFTWARE8.2
5HDFCFIN. INSTITUTIONS6.4
6ITCFMCG6.3
7TCSSOFTWARE4.9
8L&TENGINEERING4.2
9KOTAK MAHINDRA BANKBANKING4.1
10HULFMCG3.6
11SBIBANKING3.1
12AXIS BANKBANKING3.1
13BAJAJ FINANCEFINANCE3.0
14BHARTI AIRTELTELECOM2.9
15ASIAN PAINTSPAINTS2.3
16M&MAUTO1.8
17MARUTI SUZUKIAUTO1.8
18TITANCONSUMER DURABLES1.8
19SUN PHARMAPHARMA1.6
20HCL TECHNOLOGIESSOFTWARE1.6
21INDUSIND BANKBANKING1.2
22NTPCPOWER1.2
23ULTRATECH CEMENTCEMENT1.1
24NESTLEFOOD BEVERAGES1.1
25TECH MAHINDRASOFTWARE1.0
26WIPROSOFTWARE1.0
27POWER GRIDPOWER0.8
28DR. REDDYS LABPHARMA0.8
29BAJAJ FINSERVFINANCE0.2
30TATA STEELSTEEL0.1

Eligibility Criteria For Listing in Sensex

Some primary criteria used in selecting the 30 stocks that comprise Sensex are:

  • The company should be listed on BSE.
  • The stock has to be a large cap or a mega-cap.
  • There should be sufficient liquidity and good trading volume each day.
  • The revenue of the company should come from its core business activities.
  • The company should have a diversified and well-balanced sector focus in parallel to the Indian stock market.

How Sensex is Calculated?

The BSE has some checks and modifies its composition to be sure it echoes the current market conditions. Sensex is calculated based on a free-float capitalization method, an interpretation of the market capitalization method.

Instead of using a company’s outstanding equity shares, it uses its free market float or shares that are easily available for trading. Free Floating capital indicates total capitalization and fewer Directors’ shareholding.

As per the free float capitalization method, the level of the market index at any point in time reflects the free float market value of 30 constituent shares relative to a specific base period.

The market capitalization of a specific company is determined by multiplying the price of its shares by the number of shares issued by corporate actions, replacement of scrips. [Source]

Difference Between Nifty 50 and Sensex

Nifty 50Sensex
Nifty 50 is the benchmark index of the National stock exchange (NSE)Sensex is the benchmark index of the Bombay stock exchange (BSE)
Nifty consists of 50 stocks.Sensex consists of 30 stocks
It was introduced in 1996 with the base year of 1995.Sensex was introduced in 1986 with the base year of 1979.
The base value that’s utilized for the calculation of the Nifty 50 index is 1000.The base value that’s utilized for the calculation of the Sensex index is 100.
Nifty 50 is an amalgamation of the words ‘National’ and ‘Fifty’.Sensex is a combination of the words ‘sensitive’ and ‘index’.

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