Difference Between Nifty and Sensex

Well, you might have noticed some terms like Nifty and Sensex while analyzing the Stock market. You may not even understand these terms and their purpose. Here, in this blog, we shall have a deep evaluation of Nifty and Sensex and their differences. Sensex and Nifty are the two crucial metrics or data that stock marketers employ every day to determine market trends.

In India, there are two stock exchanges; the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Each stock exchange must have an index to measure the performance of the market.

Sensex is the stock market index for the Bombay Stock Exchange (BSE), and Nifty is the stock market index for the National Stock Exchange (NSE). Thus, they form the foundation of the Indian stock market. Now, let’s delve deeper into these terms which are the foundation of the Indian Stock Market.

Understanding Sensex

Sensex also known as Sensitive Index, is the Index for the Bombay Stock Exchange. An index is a sample of listed companies that stand as the representative. With a standard value of 100, Sensex is the market-weighted stock index that incorporates shares from the top 30 and well established companies, on their performance and financial reliability.

Almost 6000 companies are filed under the Bombay Stock Exchange. It is really hard to analyze the performance of each company individually. To resolve this issue Bombay Stock Exchange (BSE) makes use of Sensex. Sensex randomly sorts out some 30 companies that are persuading and performing the best in the market.

If these companies don’t perform well, then the market trends are down. Sensex doesn’t pick good companies just like that. It has certain criteria that the Bombay Stock Exchange uses to pick companies under Sensex. Some of the criteria are – Market Capitalization, Trading Frequency.

Understanding Sensex

Nifty, also known as NIFTY 50 and CNX Nifty, is the Index used by the National Stock Exchange (NSE) to determine the market trends. Nifty comprises 50 stocks that are actively performed and traded on NSE, and it should be owned and managed by India Index Services and Products Ltd. (IISL), a subsidiary of NSE.

Here, the standard base value of the index is 1000, and it is calculated using the free-float market capitalization weighted method. Similar to Sensex, the market capitalization is first calculated by multiplying equity with market price.

Nifty selects stocks from different sectors. Some are from sectors like IT, Consumer Goods, Financial Services, Automobiles, Telecommunication, etc. Nifty considers some criteria to qualify, they are – Float Adjustment, Domicile, High Liquidity, Industry Representation, and Average daily turnover.

How to Calculate Nifty?

The Nifty is calculated using a free float market capitalisation-weighted methodology of all 50 companies. The level indicated by the index reflects the total market value of all its constituent stocks within a specific timeframe.

To clarify, it’s essential to understand the terms like “float-adjusted” and “market capitalisation”. Market capitalisation is the total value of a company’s shares held by both the company and its investors. Free-float market capitalisation keeps out shares held by certain investors like trusts, government, and private entities like promoters.

To calculate the Index Value the formula is,

Index Value = (Current Market Value / Base Market Capital) * Nifty Base Index Value (1000)

Here, The current market value is the total market capitalisation of all 50 companies with their respective weights. The base market cap represents the aggregate market capitalization of all 50 companies during the base period as the Index’s base market capitalization.

During the base period, the market capitalization is equated to an index value of 1000, which is known as the base index value.

Free Float Market Capitalisation = Shares outstanding * Price * Investable Weight Factors (IWF)^

How to Calculate Sensex?

Sensex is calculated by determining the free-float market capitalization of all 30 companies and the base value of Sensex. Before calculating the Sensex, the market capitalization of 30 companies is calculated. To get the free-float capitalization value, all companies’ free Float capitalization is calculated and added together. Here is the Sensex formula,

Sensex formula = (Free float market capitalization of 30 companies / Base market capitalization) * Base value of the Index.

Difference Between Sensex and Nifty.

Let’s have a quick difference between Sensex and Nifty with the following table.

Full nameS&P BSE SensexNSE Nifty 50
OwnershipIt is owned and managed by BSE Ltd.It is owned and managed by NSE Indices.
Index CompositionIt represents the top 30 large companies.It represents the top 50 large companies.
Stock ExchangeTraded on the BSE (Bombay Stock Exchange)Traded on the NSE (National Stock Exchange)
Base Year1978-791995
Base Value1001,000
Calculation MethodFree-float market capitalisation-weighted indexFree-float market capitalisation-weighted index
Weighting MethodMarket capitalisation-weighted, based on free-float sharesIt represents the top 50 large companies
Sector Exposure13 Major Sectors24 Major Sectors
Market InfluenceIt reflects the overall sentiment and trends of the border marketIt reflects the overall sentiment and trends of the border market in the smaller sample size
SignificanceConsidered as the benchmark for Indian Equity marketsConsidered as the prominent stock market in India. It is the oldest Stock market.


Hope, it’s clear to you now. Thus, these are the important features of Nifty and Sensex. Though they have some similarities, they are different in handling the number of stock markets. These two are the significant indexes used to determine the stock market.


  • Is Sensex better than Nifty?

    Both Nifty and Sensex aids to determine the overall performance trend of the stock market. The only difference is Sensex comprises 30 companies, and Nifty comprises 50 companies. Due to the high number of active stock marketers, high liquidity, and active buying and selling, Nifty is more significant in number than Sensex, but overall, Sensex has been performing better than Nifty.

  • Which is older, the Sensex or the Nifty?

    Sensex is older than Nifty and has been outperforming Nifty though the number of companies in Nifty is more.

  • How does Nifty and Sensex work?

    Sensex and Nifty are both benchmark indices, indicating overall stock market performance, comprising the most liquid, top company stocks. Nifty is calculated on the top 50 stocks trading in the National Stock Exchange, while Sensex, also called S&P Sensex, comprises the top 30 large-cap company stocks in the Bombay Stock Exchange.