How does a layman understand Nifty and Sensex?

Hey friends, welcome to STOCK'SKNOWS. In today's article, we will understand about Nifty and Sensex.

For a person who is not familiar with the stock market, shall always need to know about Sensex and Nifty. 

What are Sensex and Nifty? is a most asked questions by newbies.

The simple word for Nifty and Sensex is, 'they are indices'. Indices which indicate the current situation of the market. 

In the market, more than 5000 stocks are listed on different exchanges. By only identifying single stocks condition one cannot comment about market condition. 

Suppose you are a market bee and your friend ask you that what is the condition of the market? how will you answer him?

The market is bullish because your portfolio shows the profit or bearish because your portfolio shows the loss. 

One can not answer this question only by analyzing his portfolio stocks.

To find real market condition we need indices which indicates actual market condition because indices are like buckets in which stocks from all sectors are available. 

Nifty 50 which is an index of National Stock Exchange(NSE) has 50 stocks from different sectors. which combines bullish and bearishness of all the sectors and provide the net result of the market condition. 
Ex. Out of 50 Stocks, 30 stocks are bullish and 20 stocks are bearish then we can say that index shows bullishness. 

By analyzing conditions of indices, you can answer your friend about the whole market condition. If all indices are bullish then the market is bullish and if they are bearish then the market is bearish. 

In India, there are main two stock exchanges National Stock Exchange (NSE) and Bombay Stock Exchange(BSE). For both exchange different indices are defined. Sensex is an index of Bombay Stock Exchange (BSE) and Nifty is the index of National Stock Exchange(NSE).

This is a simple way to understand about indices. If you find helpful above information then please Share our article and Subscribe to the newsletter of our blog.