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What is nifty?
NIFTY
In the last post, we discussed what Sensex is and how it is calculated.
Just like the Sensex which was introduced by the Bombay stock exchange, Nifty is a major stock index in India introduced by the National stock exchange.
NIFTY was coined fro the two words ‘National’ and ‘FIFTY’. The word fifty is used because; the index consists of 50 actively traded stocks from various sectors.
So the nifty index is a bit broader than the Sensex which is constructed using 30 actively traded stocks in the BSE.
The methodology for calculating the Sensex was given in our earlier post. Nifty is calculated using the same methodology adopted by the BSE in calculating the Sensex – but with three differences. They are:
- The base year is taken as 1995
- The base value is set to 1000
- Nifty is calculated on 50 stocks actively traded in the NSE
- 50 top stocks are selected from 24 sectors.
The selection criteria for the 50 stocks are also similar to the methodology adopted by the Bombay stock exchange.
