Deciphering SENSEX and NIFTY!

While there are several indexes which represent the stock market in India, Sensex and Nifty are the salient indexes which represent Indian stock market and these indexes are tracked at a global level to see how Indian stock markets are doing, similar to how we track  Dow Jones and Nasdaq indexes of US stock market.

For a stock market investor, it is always interesting to see how Sensex and Nifty moves impacts individual portfolios? To understand this, first we need to understand what are the stocks that comprise Sensex and Nifty

What is Sensex?

sensex.1An abbreviation of the Bombay Exchange Sensitive Index (Sensex) – the benchmark index of the Bombay Stock Exchange (BSE). It is composed of 30 of the largest and most actively traded stocks on the BSE. It is called BSE-30, Initially compiled in 1986, the Sensex is the oldest stock index in India. It has close to 30 years of history. Below is the list of BSE-30 stocks.

Name of the companyIndustry NameMarket cap
Axis Bank Ltd.Bank-PrivateLarge Cap
Bajaj Auto Ltd.Automobile Two & Three WheelersLarge Cap
Bharat Heavy Electricals Ltd.Electric EquipmentLarge Cap
Bharti Airtel Ltd.Telecommunication-Service providerLarge Cap
Cipla Ltd.Pharmaceuticals & DrugsLarge Cap
Coal India Ltd.Mining & MineralsLarge Cap
Dr. Reddys Laboratories Ltd.Pharmaceuticals & DrugsLarge Cap
GAIL (India) Ltd.Gas Transmission/MarketingLarge Cap
HDFC Bank Ltd.Bank-PrivateLarge Cap
Hero MotoCorp Ltd.Automobile Two & Three WheelersLarge Cap
Hindalco Industries Ltd.Aluminium & aluminium ProductsLarge Cap
Hindustan Unilever Ltd.Household & Personal ProductsLarge Cap
Housing Development Finance CorporationFinance - HousingLarge Cap
ICICI Bank Ltd.Bank - PrivateLarge Cap
Infosys Ltd.IT - SoftwareLarge Cap
ITC Ltd.Cigarettes/TobaccoLarge Cap
Larsen & Toubro Ltd.Engineering - Construction Large Cap
Lupin Ltd.Pharmaceuticals & DrugsLarge Cap
Mahindra & Mahindra Ltd.Automobiles - Passenger CarsLarge Cap
Maruti Suzuki India Ltd.Automobiles - Passenger CarsLarge Cap
NTPC Ltd.Power Generation/DistributionLarge Cap
Oil & Natural Gas Corporation Ltd. Oil ExplorationLarge Cap
Reliance Industries Ltd.RefineriesLarge Cap
State Bank Of IndiaBank - Public Large Cap
Sun Pharmaceutical Industries Ltd.Pharmaceuticals & Drugs Large Cap
Tata Consultancy Services Ltd.IT - Software Large Cap
Tata Motors Ltd. Automobiles-Trucks/LcvLarge Cap
Tata Steel Ltd.Steel/Sponge Iron/Pig IronLarge Cap
Vedanta Ltd. Steel/Sponge Iron/Pig Iron Large Cap
Wipro Ltd.IT - SoftwareLarge Cap

What is Nifty?

nifty.1Nifty or  S&P CNX is an index which represents 50 Large companies in National stock exchange of India.  The Nifty  is a well diversified 50 stock index accounting for 23 sectors of the economy. The capital market (equities) segment of the NSE commenced operations in    November 1994. It has around 20+ years of history. Below is the list of Nifty-50 stocks.

NameSector
ACC Ltd.CEMENT AND CEMENT PRODUCTS
Ambuja Cements Ltd.CEMENT AND CEMENT PRODUCTS
Asian Paints Ltd.PAINTS
Axis Bank Ltd.BANKS
Bajaj Auto Ltd.AUTOMOBILES - 2 AND 3 WHEELERS
Bank of BarodaBANKS
Bharat Heavy Electricals Ltd.ELECTRICAL EQUIPMENT
Bharat Petroleum Corporation Ltd.REFINERIES
Bharti Airtel Ltd.TELECOMMUNICATION - SERVICES
Cairn India Ltd.OIL EXPLORATION/PRODUCTION
Cipla Ltd.PHARMACEUTICALS
Coal India LtdMINING
DLF Ltd. CONSTRUCTION
Dr. Reddy's Laboratories Ltd. PHARMACEUTICALS
GAIL (India) Ltd.GAS
Grasim Industries Ltd. CEMENT AND CEMENT PRODUCTS
HCL Technologies Ltd. COMPUTERS - SOFTWARE
HDFC Bank Ltd. BANKS
Hero Honda Motors Ltd.AUTOMOBILES - 2 AND 3 WHEELERS
Hindalco Industries Ltd.ALUMINIUM
Hindustan Unilever Ltd.PERSONAL CARE
Housing Development Finance Corporation Ltd.FINANCE - HOUSING
I T C Ltd.CIGARETTES
ICICI Bank Ltd. BANKS
IndusInd Bank Ltd.BANKS
Infosys Technologies Ltd. COMPUTERS - SOFTWARE
Infrastructure Development Finance Co. Ltd. FINANCIAL INSTITUTION
Jindal Steel & Power Ltd. STEEL AND STEEL PRODUCTS
Kotak Mahindra Bank Ltd.BANKS
Larsen & Toubro Ltd. ENGINEERING
Lupin Ltd.PHARMACEUTICALS
Mahindra & Mahindra Ltd.AUTOMOBILES - 4 WHEELERS
Maruti Suzuki India Ltd.AUTOMOBILES - 4 WHEELERS
NMDC Ltd. MINING
NTPC Ltd.POWER
Oil & Natural Gas Corporation Ltd.OIL EXPLORATION/PRODUCTION
Power Grid Corporation of India Ltd. POWER
Punjab National Bank BANKS
Reliance Industries Ltd.REFINERIES
State Bank of IndiaBANKS
Sun Pharmaceutical Industries Ltd.PHARMACEUTICALS
Tata Consultancy Services Ltd.COMPUTERS - SOFTWARE
Tata Motors Ltd. AUTOMOBILES - 4 WHEELERS
Tata Power Co. Ltd.POWER
Tata Steel Ltd.STEEL AND STEEL PRODUCTS
Tech Mahindra Ltd.COMPUTERS - SOFTWARE
UltraTech Cement Ltd.CEMENT AND CEMENT PRODUCTS
United Spirits Ltd.BREW/DISTILLERIES
Vedanta Ltd MINING
Wipro Ltd. COMPUTERS - SOFTWARE

The Sensex and  are Nifty both indicators of market movement. If the Sensex or Nifty go up, it means that most of the stocks in India went up during the given period. If the Nifty goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down.

What are Sensex and Nifty used for?

Both Sensex and Nifty are used as indicators for the market movements and also as a bench mark for the mutual fund managers for measuring the performance of the mutual funds. For example, if the Nifty gained 15% in last one year and the large cap mutual fund gained 20% during the same period, this fund performance is considered to be good. Most of the top quartile funds do better than Nifty. This comparison is specific to large cap mutual funds, if the fund is midcap focused fund, you need to compare with other indexes like CNX Midcap etc.

 

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