EVERYTHING YOU NEED TO KNOW ABOUT NIFTY AND THE SHARE MARKET

We often come around terms like Nifty and BSE Sensex, it is thus necessary to align oneself with the actual reference of such terms and understand their value in the share market. In this article, we’ll guide you with what Nifty exactly is, its meaning in the share market, nifty share price and related aspects to cut down daunting tasks for you.

Nifty, originally a mix of the words “National Stock Exchange” and “fifty” is a popular stock market index that has been introduced by the National Stock Exchange (NSE). In other words, NIFTY 50 is a benchmark index regulated by the NSE that lists the top 50 performing equity stocks that are being traded on the platform.

Launched on April 22, 1996, the Nifty 50 is one of the two main stock indices used in India, where the other being the BSE Sensex stands equally important. With fifty actively trading companies, the stock on its index span across twelve different sectors of the Indian economy, where there are a total of 1600 stocks trading on the NSE in a single day.

Understanding the stock market index

A stock index, also known as the stock market index is a statistical tool used to measure a stock market or even a subset of the stock market, that helps investors choose and compare current stock price levels with past prices of the stock to calculate the market performance.

A stock market index is established by selecting equities from similar companies or those that align with the predetermined set of criteria, that are investable and transparent. In other words, if the prices of the stocks in an index rise, it will be followed by a rise in the index as a whole.

Significance of Nifty

A benchmark index like Nifty helps you cut down on the tedious tasks of selecting stocks amongst a variety of options and is thus considered to be the barometer of the stock market in India. This parameter of listing the top trading companies facilitates investors to easily find effective stocks to invest in, therefore, saving time and ensuring convenience at most.

Sensex vs Nifty

First things first. Nifty constitutes of a broader market index with 50 actively trading companies in the NSE. Whilst, Sensex only comprises of the top 30 actively trading companies in BSE covering 13 sectors of the Indian economy. Both, Nifty and Sensex sound a lot similar when it comes to serving the purpose but practically are quite different from one another.

As mentioned earlier, NSE records a total of 1600 stocks trading on a single day, which brings to light the concept of Intraday Trading.

Intraday trading refers to buying and selling of stocks within the same trading day, where stocks are purchased for the purpose of generating profits by keeping a track of the stock indices. For such purpose, an online trading account at 5paisa will help you ace intraday trading and grow your capital wisely with low-cost broking services and reduced risk of intraday trading.

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