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 NAME||SECTOR||WEIGHTAGE|
|1||RELIANCE INDUSTRIES LTD||PETROLEUM PRODUCTS||11.70%|
|2||HDFC BANK LTD||BANKS||8.61%|
|4||HOUSING DEVELOPMENT FINANCE CORPORATION LTD||FINANCE||5.81|
|5||ICICI BANK LTD.||BANKS||7.93%|
|6||TATA CONSULTANCY SERVICES LTD||SOFTWARE||4.24%|
|7||KOTAK MAHINDRA BANK LTD||BANKS||3.55%|
|8||HINDUSTAN UNILEVER LTD||CONSUMER NON-DURABLES||3.03%|
|9||AXIS BANK LTD||BANKS||2.89%|
|10||LARSEN TOUBRO LTD||CONSTRUCTION PROJECTS||3.08%|
|11||ITC LIMITED||CONSUMER NON-DURABLES||3.64%|
|12||STATE BANK OF INDIA||BANKS||2.66%|
|13||BAJAJ FIANANCE LTD||FINANCE||2.30%|
|14||ASIAN PAINTS LIMITED||CONSUMER NON-DURABLES||1.82%|
|15||BHARTI AIRTEL LTD||TELECOM- SERVICES||2.27%|
|16||HCL TECHNOLOGIES LTD||SOFTWARE||1.30%|
|17||MARUTI SUZUKI INDIA LTD||AUTO||1.54%|
|18||TATA STEEL LTD||FERROUS METALS||1.13%|
|20||ULTRA TECH CEMENT LIMITED||CEMENT AND CEMENT PRODUCTS||1.02%|
|21||MAHINDR & MAHINDRA LTD||AUTO||1.53%|
|22||BAJAJ FINSERV LTD||INSURANCE||1.20%|
|23||SUN PHARMACEUTICAL INDUSTRIES LTD||PHARMACEUTICALS||1.26%|
|24||TITAN COMPANY LTD||CONSUMER DURABLES||1.30%|
|25||TECH MAHINDRA LTD||SOFTWARE||0.87%|
|26||DR. REDDYS LABORATORIES LTD||PHARMACEUTICALS||0.67%|
|27||JSW STEEL LTD||FERROUS METALS||0.75%|
|28||NESTLE INDIA LTD||CONSUMER NON-DURABLES||0.91%|
|29||INDUSIND BANK LTD||BANKS||0.80%|
|30||TATA MOTORS LTD||AUTO||1.03%|
|31||POWER GRID CORPORATION OF INDIA LTD||POWER||1.01%|
|32||GRASIM INDUSTRIES LTD||CEMENT AND CEMENT PRODUCTS||0.78%|
|33||HDFC LIFE INSURANCE COMPANY LTD||INSURANCE||0.78%|
|34||DIVIS LABORATRIES LTD||PHARMACEUTICALS||0.60%|
|36||HINDALCO INDUSTRIES LTD||NON-FERROUS METALS||0.77%|
|37||BAJAJ AUTO LIMITED||AUTO||0.61%|
|38||ADANI PORTS & SPECIAL ECONOMIC ZONE||TRANSPORTATION||0.90%|
|40||TATA CONSUMER PRODUCTS LIMITED||CONSUMER NON-DURABLES||0.66%|
|41||SBI LIFE INSURANCE COMPANY LTD||INSURANCE||0.76%|
|42||BHARAT PETROLEUM CORPORATION LTD||PETROLEUM PRODUCTS||0.43%|
|44||BRITANNIA INDUSTRIES LTD||CONSUMER NON-DURABLES||0.58%|
|45||OIL & NATURAL GAS LIMITED||OIL||0.66%|
|46||EICHER MOTORS LTD||AUTO||0.58%|
|47||HERO MOTOCORP LTD||AUTO||0.48%|
|49||COAL INDIA LTD||MINERALS\MINNING||0.66%|
|50||APPOLO HOSPITALS ENTERPRISES LTD||PHARMACEUTICALS||0.90%|
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
|9||KOTAK MAHINDRA BANK||BANKING||4.1|
|28||DR. REDDYS LAB||PHARMA||0.8|
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 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’.|