Sensex and Nifty are the two main indexes in the Indian stock market. These indexes give an idea to investors and general audience where the market is heading towards. Sensex and Nifty are called as index basically this index encapsulates stocks within one single entity. Stocks collection and encapsulation is basically based on the category of the stock.
Sensex index contains top 30 companies stocks based on the valuation, financial data, and core business. The Sensex is basically related to the all major stocks listed at BSE Mumbai. Only financial sound companies and most active stocks are listed under Sensex. This index is also denoted as a BSE index. Whereas Nifty contains top 50 companies stocks based on the company’s core business, valuation, and profit. The Nifty is basically related to the all major stocks listed at NSE Delhi. This index is also denoted as NSE Nifty index.
BSE Sensex contains top 30 companies stocks, which means when BSE Sensex goes up it means most of the stocks of the major companies listed within BSE Sensex goes up. If the Sensex goes down which means most of the stocks of the BSE Sensex goes down.
Similarly, Nifty contains top 50 companies stocks, which means when the Nifty index goes up then most of the stocks within the NSE Nifty index goes up. Whereas when most of the stock goes down then NSE Nifty index goes down.
Apart from Sensex and Nifty, there are other indexes available. Midcap index is the index where all midcap companies stocks are listed under midcap indexes. Small cap index is the index where all small companies stocks are listed.
Also for all other sector indexes are categorized. Pharmacy sector, IT sector, banking sector have own indexes. Just by seeing the Current value of the indices one can say whether stocks of specific sectors going high or down.