Sensex or Nifty – Which one you should follow

SENSEX and NIFTY both are the stock market index of BSE and NSE. A stock market index or stock index is consist of a collective stock which measures the strength of a market. We always hear that Sensex is up or Nifty is down it means most of the stocks in Sensex are up or most of the stocks in Nifty are down. But the stock which is in Nifty if it down at the same point of time it would be down in Sensex too. Sensex which is now known as S&P BSE Sensex after tying up with S&P comprises 30 large caps and most actively traded stock in the market. Whereas Nifty now known as S&P CNX Nifty is also comprised 50 large caps and most actively traded stock, it is also known as Nifty50.

SENSEX and NIFTY both are the stock market index of BSE and NSE- Which one you should follow
Sensex or Nifty – Which one you should follow

Sensex vs Nifty :

BSE was the only option for investors prior to 1992 before NSE was established. The base value of the BSE Sensex was taken as 100 on 1st April and its base year was 1978-79, whereas Nifty50 was launched in 1996 and the base value of the Nifty was set at 1000. Apart from two national level stock exchanges, there are other 21 state-level stock exchanges which were mostly established prior to NSE.

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Almost two decades ago investors used to follow the only Sensex and to break its monopoly government established NSE and that is how Nifty index started in 1996. From the beginning itself, NSE had introduced much new technology in the stock market like demat of shares, terminal-like NEAT, Online Share Trading and now Algorithm. Though Sensex is a bigger brand in the share market Nifty has outperformed after introducing F&O segment in 2000.

In a short span of time, NSE has gain popularity in the stock market through its technology and so its index Nifty. NSE has started a revolution in the stock market with new technology and introducing new segments for the investors. BSE also not far behind always followed NSE in any developments. Though BSE is a bigger brand name in the stock market NSE outperformed BSE in volume game.

Sensex or Nifty: which one is significant

As an investor though you would not find any significant difference in price of a stock in Sensex and Nifty but you can spot the difference in volume. Nifty has gained more popularity after NSE introduced the derivative segment and from then onwards many investors started following Nifty as their benchmark indices. As derivative traders are following up other future indices like Nifty, Banknifty etc so it becomes convenient and helpful to follow Nifty on spot/cash segment also. Whereas there are many T group shares and penny stocks shares which are not listed in NSE, the traders of those segment are continuing to follow up Sensex because they have to trade only in BSE. Likewise, some traders are divided according to their trading nature. There is nothing significant difference following up Sensex or Nifty one can follow either of them or even both. One is the oldest exchange in India and the other one is technologically advance and volume drove exchange. One can follow any of the two or both to track the market.

Happy Investing!
Finogyan Team

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Sensex or Nifty – Which one you should follow Sensex or Nifty – Which one you should follow Reviewed by Finogyan on September 13, 2018 Rating: 5

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