What does Sensex, BSE, NSE, and Nifty Mean

Manish is an avid investor in the stock exchange and loves to share some basic fundas with his inquisitive friends.

In India, there are two major stock exchanges – NSE or National Stock Exchange & BSE or Bombay Stock Exchange. BSE is the oldest stock exchange in Asia while NSE is the largest in the country.

Sensex & Nifty are indexes or indicators that offer a general idea about whether most of the stocks have gone up or down.

Sensex is like a barometer of market sentiments for BSE. So, if the Sensex goes up, there is a high probability, stock prices of companies listed on BSE will largely go up.

Similarly, Nifty registers market sentiments for NSE. So, if the Nifty goes up, there is a high probability, stock prices of companies listed on NSE will largely go up.

You can trade in both Sensex & Nifty by partnering with Angel Broking.

Frequently Asked Questions

Is it better to buy on NSE or BSE?

Both NSE and BSE are the stock exchanges in India. NSE or National Stock Exchange is the youngest stock exchange in India, starting its journey in 1992. BSE or Bombay Stock Exchange is the oldest stock exchange in India, more than a century old.

The volume traded in NSE is higher, and hence, it offers more investment opportunities and higher liquidity. It is a clear choice for the investor which stock exchange he will choose to trade.

What are the timings of BSE and NSE?

Timing of both BSE and NSE is the same – opening time 9:15 am and closing time 3:30 pm from Monday to Friday. Both bourses remain close on festivals and events of national importance. Check out BSE and NSE holidays here.

Can I buy on NSE and sell on BSE?

The answer is both yes and no. If you have bought the shares sometime back in BSE and trying to sell it in NSE to gain from the price difference you can do that. Arbitraging is allowed in India for the shares in your portfolio, but not for intraday trading. The current mechanism bars you from inter-exchange selling for intraday trades, and, may as well attract a penalty.

Why are prices different in NSE and BSE?

It’s mainly because of the difference in the volume traded in the two exchanges. Trade volume is higher in NSE than BSE. However, the maximum share price difference can be 1 percent between the two exchanges.

What is Sensex and Nifty in simple words?

Both SENSEX and NIFTY are benchmark indices to denote market movement. SENSEX is the major index of BSE and NIFTY is the index of NSE.
These indices are the weighted average of the largest mega-cap Indian companies from different sectors and measure market direction – rising SENSEX meaning the market is soaring.

How are Sensex 30 companies selected?

The SENSEX comprises the 30 top companies from different sectors to create an unbiased index. The selection uses the following criteria.

The stocks of the company must trade for every day for one year
The company must belong to the top 150 companies listed based on the average number of trade (both buying and selling) and the average value of trade
The listing should be more than a year old

There are some preconditioning and exclusion criteria, like Z category companies and IPOs aren’t considered for inclusion. Also, the inclusion process requires companies to report their sales turnover for at least four quarters.

How is Sensex calculated?

Since 2003, calculation of SENSEX uses the free-float market capitalisation method.
Free float market capitalisation is the weighted average of the number of stocks of a company that is readily available for trade, that is not owned by other shareholders, promoters, or government, or the locked in shares that aren’t available for trading, calculated against index base period.

Which one is bigger NSE or BSE?

It terms of trade volume, NSE fairs better than BSE, although BSE is the oldest stock exchange in India and also has more companies listed in it. But due to high liquidity, NSE enjoys more active days and participation from retail traders than BSE.

How is nifty calculated?

NIFTY is calculated using the free-float market capitalisation weighted formula. It measures the value the stocks of a company available for trading in the market against the index base-period of 1995.

What is the difference between BSE, NSE, and Nifty?

NSE and BSE are the two major Indian bourses. NSE stands for National Stock Exchange, while BSE is the Bombay Stock Exchange. Companies can list in one or both the bourses, and you can trade company stocks in any of these exchanges by opening a DEMAT account.

On the other hand, Nifty is an exchange index introduced by NSE. The term is coined by combining NSE and fifty as it contains stocks of 50 best-performing companies, according to NSE. It is, therefore, a benchmark index and also the flagship of NSE, composing the top 50 performing stocks among 1600 stocks

Which is better, NSE, or BSE?

Fundamentally there is no difference between the BSE and NSE. They are the main bourses in India, where investors can trade in listed company stocks.
BSE is the Bombay Stock Exchange, which is the oldest stock exchange in India, over a hundred years old. NSE is the new kid in the block, but it is the largest in terms of daily traded volume.

What is the distinction between Sensex and Nifty?

SENSEX is the flagship market index of the BSE stock exchange, also known as S&P BSE SENSEX. It comprises 30 top-performing companies in the BSE exchange, whereas Nifty contains 50 companies. So, what is Nifty? Nifty is the market index introduced by the National Stock Exchange. Calculating Nifty involves the free-float market capitalisation weighted methodology.

BSE adopted a free-float market capitalisation weighted methodology to calculate index in 2003.
Another critical difference between the two market indices is the difference in the base years. BSE uses 1978-79 as its base year when NSE uses 1995 as its base year.

How is Sensex calculated?

Calculating SENSEX involves the free-float market capitalisation weighted method, using 1978-79 as the base period.

BSE Sensex picks the stocks from the existing participants in the top 100 list. Each share contributes a weight of 0.5 percent in the free-float weight method. Shares trading for at least one year, on each day of the trading calendar, are picked to add credibility to the index.

Calculating free-float market capitalisation involves a complex formula of multiplying market capitalisation with a free-float factor. And, in the last step, the free-float market capitalisation of each 30 company is then divided by the index divisor of 100.
Sensex reflects the return that an investor can earn from investing in the basket.

Frequently Asked Questions

Is it better to buy on NSE or BSE?

What are the timings of BSE and NSE?

Can I buy on NSE and sell on BSE?

Why are prices different in NSE and BSE?

What is Sensex and Nifty in simple words?

How are Sensex 30 companies selected?

How is Sensex calculated?

Which one is bigger NSE or BSE?

How is nifty calculated?

What is the difference between BSE, NSE, and Nifty?

Which is better, NSE, or BSE?

What is the distinction between Sensex and Nifty?

How is Sensex calculated?

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