What is the difference between the Sensex and the Nifty?

Updated: Saturday, October 11, 2014, 10:13 [IST]

The BSE Sensex is one of the most popular stock indices in the world. Today, the correct term used is the S&P BSE Sensex. The Nifty on the other hand is also called the S&P CNX Nifty.

What is the difference between the Sensex and the Nifty?

Let is simply call the indices the Sensex and the Nifty and avoid using the technically correct terms, since these are popularly known as Sensex and the Nifty. The Sensex is a Bombay Stock Exchange index while the Nifty is an index of the National Stock Exchange. The other major difference between the two indices is while the Sensex has 30 stocks that form a part of the index, the Nifty has as many as 50 stocks. Select stocks like Asian paints, BPCL, Cairn India, IndusInd Bank, IDFC and a few more do not form part of the Sensex, but form part of the Nifty.

Hence, the latter is more broad based than the former. The Sensex is a much older index as compared to the Nifty, as the Bombay Stock Exchange is one of the oldest stock exchange, with the NSE only commencing operations in the 1990s. The Sensex has used the free float market capitalization method. What this means is that only the free float of shares is used. Read more on free float here

Some say this more advantageous and it is a debate that is entirely different altogether.

Which is more popular Sensex or Nifty?

It all depends on which index an individual tracks. For the small retail investor, the Sensex is more popular. Different reporting agencies and popular investment houses track both the indices. The Sensex being the older of the indices may have a slight edge here. People who would like to track a broader section of the markets, particularly in the futures market may want to track the Nifty movement more closely.

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