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NSE and BSE | NIFTY and SENSEX



NSE and BSE | SENSEX and NIFTY




If you have arrived at this post you must have heard about this term NSE and BSE. You might not know much about it much but you surely know that it is related to stock markets. Now, What is a stock market, and what is NSE, BSE, SENSEX, and NFITY, all of your questions will be answered here in this post. So keep reading.

Before that, what is a stock? A company’s capital is divided into shares which means ownership. When you buy a stock, you are buying the unit of ownership of the company through shares. Now, why would one buy a share of some company? For-profit, right!!! You buy a share of a company with a view that its value is going to rise with time and you are going to sell off and book profit at a higher price. This view is also called Bullish View.

Similarly, a seller would sell his stocks if he has already purchased the stock at a lower price or expects that that the price of the share will come down with time. This view is also called as Bearish View. Now Buyers and sellers connect to the exchanges through their brokers and make a trade. You must have heard the names of some of the brokers like Zerodha, Sharekhan, etc.

BSE and NSE

BSE stands for Bombay Stock Exchange and it is the oldest stock exchange in Asia. A stock exchange is a marketplace where different stocks are listed and are sold and bought by traders. Any stock you buy has to be listed in an exchange, BSE or NSE.  BSE  has more than 5000 stocks listed in it.

NSE stands for National Stock Exchnge. This exchange was founded in the year 1992. With time, it has become India's biggest stock exchange concerning market capitalization. NSE has more than 1600 stocks listed in it. A stock may be listed in either of the BSE or NSE or both exchanges.

Sensex and Nifty

SENSEX is a benchmark index of BSE and was introduced in 1986. It depicts the weighted average value of the top 30 companies listed in the stock exchange. It follows the trend of the companies listed in BSE under SENSEX. If the stock of these 30 companies will rise, the index will also rise and if they fall, the index will also fall. However, it is the weighted average movement of the stocks and each stock is weighted differently depending on its market capitalization.

NIFTY is the benchmark Index of NSE. NIFTY derives its value from the top 50 companies which are the biggest in terms of market capitalization. It has derived its name from NSE and Fifty, combining both become NIFTY.  Similar to the SENSEX, its movement also depends on the movement of 50 stocks listed in NIFTY.

Now, keep in mind the stocks under these indexes can change with time. Any Stock may enter NIFTY which is performing as per the top 50 stock criteria of NIFTY and another stock may get out of it which loses its spot in the top 50. The same is the case with SENSEX.

This brings us to the fact that NIFTY and SENSEX have grown so much with time while some of the largest companies have fallen. While these two are well-known indexes, they are not the only ones, there are various other indexes that derive their value from a different set of stocks e.g. BANKNIFTY, S&P BSE Midcap, etc.

Key Takeaways:

Both the NSE and BSE are among the top exchanges of the world and are supported by a large number of listed stocks. That is why the volume of trades in these exchanges is also huge. Sensex and Nifty are the two largest Benchmark indexes and heavily traded ones.

You can continue learning more about stock markets and how to make money through them in our further posts.


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