If you are new in the stock market, then these two words must be confusing you a lot. Sensex and Nifty, what are they? Why have they been named? Don't you find the name very interesting? But what is their significance? What is their use? What do they mean?
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| Nifty 50 and Sensex |
Some people listen about Sensex and Nifty. After that, they open their Demat account, and after opening the Demat account, they say that I am not able to buy Sensex. How do you buy Sensex? I am not able to buy Sensex. How do you buy Nifty? If you are new, then all these challenges will come in front of you. Now understand carefully, you will understand everything.
Why can't you buy Sensex? I will tell you. So now you all know about the stock market, which is the market where we buy shares; we buy the stocks of companies. Now we have understood this. But what happens now is that there are two exchanges in the stock market. One is the National Stock Exchange (NSR) and the other is the Bombay Stock Exchange (BSE).
I have a very small question, tell me, what do you think, how many companies, now you know that there are thousands of companies listed on the National Stock Exchange. Will more companies be listed on the National Stock Exchange or on the Bombay Stock Exchange? You will think that the National Stock Exchange means the whole of India, so there will be more in this and the Bombay Stock Exchange is less in this, if we talk about Bombay. There are confusions of people, but it is not like that.
Approximately 5000 companies are listed on the Bombay Stock Exchange and on NSC almost 1600 companies are listed. So on NSE, 1600 companies are listed, and 5000 companies are listed on BSE. Now people will say that there will be different companies, that is, the companies listed on NSE are not listed on BSE, but it is not like that. Let's say the share of ITC, you have to buy, you will get it on NSE and you will get it on BSE. India's stock exchange is a little different, a little different from the outside. So here it is listed on both, I am giving you an example. Now in the same way, Reliance, you will get it on NSE and BSE. You will get Tata Steel on NSE and BSE, so whatever you talk about popular stocks, you get it on both, but still more companies are listed on BSE.
Now we understood this, it means that if this stock market is a market, then there is a shop in this market, like a wholesale shop or a superstore, supermarket, both of them have become supermarkets in themselves. Let's say supermarkets have become, they get stocks.
Now you don't understand this, okay? I understood this, but still I didn't understand what Nifty and Sensex are. Now let's assume that today in the whole market, you go to the vegetable market; the rate of vegetables is more or less the same. How will you know? You will have to find out the rate of each vegetable. What is the rate of potatoes? What is the rate of onions? What is the rate of cauliflower? Now if you find out separately, it will take a lot of time. If you have 5000 types of vegetables, it will take a lot of time. So now for this, to make your work easier, an index has been made. Index, that brother; just look at the index, and you will find out from this that the prices of the stocks in the whole market are going up and going down. You will get to know the work will be easy.
So to make this work easy, Sensex and Nifty have been made for you. Now Sensex is made by combining two words, sensitivity and index. So your sensitivity and index is represented by Sensex. Market sensitivity is represented by Sensex and Nifty is made by combining two words. Nifty is made by combining the words national and fifty. Why Fifty? Because in Nifty, you must have heard the name Nifty 50. So in Nifty, India's top 50 companies come, but it is like this: Nifty comes in Nifty 50, Nifty 100, Nifty 200. So Nifty 200, so it will not come to 50; 200 companies come, which are the top 200 companies after Nifty 50; they come here in Nifty 200. Now you have understood this too, but how many companies are there in Sensex? Sensex is made, which looks at the index; it has 30 companies. Now you will say, Only 30! When we are talking here, there are 5000 companies on BSE, so now only 30 companies out of these 30 companies can show the whole market that the market is going up and down. The 1600 companies are listed on NSE; out of these 50 companies, Nifty is made. How can 50 companies tell the movement of the whole market?
Part 1: What is Share Market? Basic Concepts of Share Market.
Let me tell you, when you see Nifty or Sensex, then I will tell you that only in Nifty 50, the weightage of India's top 50 companies is 50% of the entire stock market. It means that if Nifty's and Sensex's rates are going up, then it is being found that the movement in the share market is going up; it is a bullish movement, and if it falls, then it means that the overall market has gone down, and how is it being found that the weightage of 50 companies is approximately 50%.Can we make an index sector-wise? The answer is yes. Nifty FMCG's rate is different. Why is its rate different? Because it is a combination of those companies that are India's top FMCG companies. Similarly, the index is of the auto sector, Nifty Auto; its rate is different. Similarly, you will see Nifty IT, which is the index of IT companies; now, if you want to see which sector-wise performance has gone up, then you can see that online. So Nifty IT has given very good returns to investors.Now you had a very important question that was left in the beginning: why can people not buy Sensex directly? Because it is an index, you cannot buy it directly; it is just telling the sensitivity, and you cannot buy Nifty, but the companies in Nifty, like Nifty 50, have 50 companies. You can invest in these if you want; you can search on the net for which companies are there and see every 6 months the companies that are performing well. The top companies will be in Nifty 50.So there are two ways: you can select those companies and invest in their stocks, or you can directly invest in mutual funds, which are running according to Nifty. The Nifty-based mutual funds, you can invest in them, so your money will be invested in Nifty in the future. Now these are the two ways you can invest in Nifty, and this is the reason that because it is an index, it is not a stock; there is a price, but it is not a share in itself. To buy them, you have to take the support of mutual funds, or you have to identify the companies that come in Sensex and Nifty, and then you have to buy the stocks of those companies. So I hope your doubts would have been cleared from today's post.
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