To understand the stock markets in a better way, it is important to know meaning of Nifty and Sensex. One needs to know how NSE and BSE work. NSE stands for National Stock Exchange. BSE stands for Bombay Stock Exchange. They both are the oldest stock exchanges in India. Furthermore, sensex is the stock index introduced by the BSE. Similarly, nifty is the stock index that was introduced by the NSE.
Let us first start by learning more about nifty and its related concepts like Meaning of nifty 50, full form of nifty, etc.
Meaning of Nifty (NF)
The first question that crosses our minds when we hear the term nifty is what does it mean? nifty full form? Well, the full form if Nifty is “National and Fifty”. It means that nifty consists of 50 stocks that are actively traded. Furthermore, these stocks belong to 12 different sectors of the economy.
The contracts of NF rank among the most traded in the world. India Index Services and Products Ltd. (IISL), which is a subsidiary of NSE Strategic Investment Corporation Limited, manages and owns Nifty. The Nifty 50’s another important term that needs to be understood before trading in the stock markets. Therefore, let us take a look at it and the related terms.
Nifty 50 Meaning
Nifty 50 was launched on April 21, 1996. It’s managed by IISL. It’s a flagship index comprising of 50 stocks of the index from 12 different sectors. As on March 31, 2017, the Nifty 50 index comprised of about 62.9% of the free float market capitalization of the stocks that are listed on NSE India. In fact, the total trade in stocks of Nifty 50 during the last six months ending March 2017 was 43.8% of the traded value of all stocks of NSE.
Below is Nifty 50 companies list 2019:
Company Name | Industry |
Adani Ports and Special Economic Zone Ltd. | Services |
Ambuja Cements Ltd. | Cement and Cement Products |
Asian Paints Ltd. | Consumer Goods |
Aurobindo Pharma Ltd. | Pharma |
Axis Bank Ltd. | Financial Services |
Bajaj Auto Ltd. | Automobile |
Bajaj Finance Ltd. | Financial Services |
Bharat Petroleum Corporation Ltd. | Energy |
Bharti Airtel Ltd. | Telecom |
Bharti Infratel Ltd. | Telecom |
Bosch Ltd. | Automobile |
Cipla Ltd. | Pharma |
Coal India Ltd. | Metals |
Dr. Reddy's Laboratories Ltd. | Pharma |
Eicher Motors Ltd. | Automobile |
GAIL (India) Ltd. | Energy |
HCL Technologies Ltd. | IT |
HDFC Bank Ltd. | Financial Services |
Hero MotoCorp Ltd. | Automobile |
Hindalco Industries Ltd. | Metals |
Hindustan Petroleum Corporation Ltd. | Energy |
Hindustan Unilever Ltd. | Consumer Goods |
Housing Development Finance Corporation Ltd. | Financial Services |
I T C Ltd. | Consumer Goods |
ICICI Bank Ltd. | Financial Services |
Indiabulls Housing Finance Ltd. | Financial Services |
Indian Oil Corporation Ltd. | Energy |
IndusInd Bank Ltd. | Financial Services |
Infosys Ltd. | IT |
Kotak Mahindra Bank Ltd. | Financial Services |
Larsen & Toubro Ltd. | Construction |
Lupin Ltd. | Pharma |
Mahindra & Mahindra Ltd. | Automobile |
Maruti Suzuki India Ltd. | Automobile |
NTPC Ltd. | Energy |
Oil & Natural Gas Corporation Ltd. | Energy |
Power Grid Corporation of India Ltd. | Energy |
Reliance Industries Ltd. | Energy |
State Bank of India | Financial Services |
Sun Pharmaceutical Industries Ltd. | Pharma |
Tata Consultancy Services Ltd. | IT |
Tata Motors Ltd. | Automobile |
Tata Steel Ltd. | Metals |
Tech Mahindra Ltd. | IT |
UPL Ltd. | Fertilisers & Pesticides |
UltraTech Cement Ltd. | Cement & Cement Products |
Vedanta Ltd. | Metals |
Wipro Ltd. | IT |
Yes Bank Ltd. | Financial Services |
Zee Entertainment Enterprises Ltd. | Media & Entertainment |
(Source: www.nseindia.com)
Next, we shall have a look at 12 different sectoral indices that are part of Nifty 50.
# Sectoral Indices
Auto Index
This index includes the stocks of automobile sector. It includes companies that manufacture cars, heavy vehicles, two-wheeler’s, auto ancillaries, tires, etc. Furthermore, total of 15 stocks are listed on the exchange. In addition, the Nifty Auto Index represents about 8.6% of the free float market capitalization of the stocks listed on NSE. Few stocks part of Nifty Auto Index includes Maruti, Hero Motocorp, etc.
This bank index represents approx. 15.6% of the free-float market capitalization of the stocks listed on the NSE. Nifty Bank comprises of large capitalized banking stocks of India. In fact, there are 12 banking stocks trading on the exchange that forms part of Nifty Bank.
PSU Bank Index
This index was developed to capture the performance of public sector banks of India. It represents about 2.3% of the free-float market capitalization of the stocks listed on NSE. The index helps in acknowledging the growth and development of PSU banks in comparison to its competitors.
Private Bank Index
This index comprises of 10 private sector banking stocks listed on the exchange. Nifty Private Bank Index reflects the performance of private banks of India. It represents about 13.9% of the free-float market capitalization of the stocks listed on NSE.
Financial Service Index
This index comprises of 15 stocks listed on the exchange. Furthermore, Nifty Financial Service Index captures the performance of financial institutions, housing finance companies, banks and other companies providing financial services. It represents about 19.2% of the free-float market capitalization of the stocks listed on NSE.
FMCG Index
Nifty FMCG Index comprises of 15 companies listed on the exchange and represents about 8.6% of the free-float market capitalization of the stocks listed on NSE. FMCG goods mean Fast Moving Consumer Goods. Such products are consumed by masses and available almost everywhere.
IT Index
This index comprises of 10 companies and represents about 12.15% of the free-float market capitalization of the stocks listed on NSE. Information and Technology index consists of companies that are crucial for the Indian economy. In addition, this index measures the performance of companies in the IT sector.
Media Index
This index measures the performance of the companies in the media and entertainment sector. It represents approx. 72.8% of the free float market capitalization of the stocks listed on NSE.
Metal Index
This index represents 15 stocks listed on the exchange. Maximum of 15 stocks can form part of this index. Nifty Metal Index measures the performance of the metal sector of the country. It represents about 2.6% of the free float market capitalization of the stocks listed on NSE.
Pharma Index
This index captures the performance of the Indian pharma companies in India and across the globe. India has developed a strong foothold in the pharmaceutical sector that makes this index important. Furthermore, Nifty Pharma Index represents about 6.1% of the free float market capitalization of the stocks listed on NSE.
Realty Index
Nifty Realty Index represents the performance of the real estate sector of India. This index is important as infrastructure growth can be captured looking at the growth of this sector. It represents about 0.4% of the free float market capitalization of the stocks listed on NSE.
500 Industry Indices Index
IISL maintains different industry groups under Nifty 500 Industry Indices Index.
The above indexes are constituents of Nifty 50. Now let us proceed ahead and understand the term Sensex.
Meaning of Sensex
Sensex is one of the main stock market indices in India. It was introduced by Bombay Stock Exchange i.e. BSE on 1st January 1986. The main reason why Sensex came into existence was to know the market sentiments in relation to different sectors. The index comprises of 30 stocks known as BSE 30. In addition, these 30 stocks are selected after they fulfill qualitative and quantitative criteria. Let us look at the list of 30 stocks under Sensex India.
| Company Name | |
|---|---|
| Adani Ports | Coal India |
| HUL | M&M |
| SBI | Asian Paints |
| Dr Reddys Labs | ICICI Bank |
| Maruti Suzuki | Sun Pharma |
| Axis Bank | GAIL |
| Infosys | NTPC |
| Tata Motors | Bajaj Auto |
| HDFC | ITC |
| ONGC | Tata Steel |
| Bharti Airtel | HDFC Bank |
| Larsen | Powergrid |
| TCS | Cipla |
| Hero Motocorp | Lupin |
| Reliance | Wipro |
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