Today, the Sensex is down 100 points, tomorrow up 100 points, sometimes the Nifty is down 50 points, someday up, every day these Sensex and Nifty are up and down. So many times you will have a question in your mind that what does this Sensex and Nifty represent? How are they made? Why are they up and down? Why is it the region that is fluent every day? So today I will explain everything about what is SENSEX and NIFTY, why they have daily movement and how you have to interpret them so that you can take the better decisions on the basis of their movement.
Today we know the complete true phenology of SENSEX and NIFTY. So many business news channels throughout the day keep reporting real time live to the ups and downs in the Sensex and Nifty, as if this is the most important thing in the world and if the Sensex falls 200 points then you don't know what will happen. So today I tell you what is the Sensex and the Nifty?
What is the Sensex and the Nifty?
See, we all see in the elections that whenever elections are held, opinion polls or exit polls come. Exit polls come before the result. Why do these exit polls come? Its simple reasoning so that you get an idea of where this election is going which direction. But it is not always necessary that the exit poll is correct.
Most of the time, 60-70% of the time exit polls result are correct, but they are not correct every time. Why are they not right, because if there are lakhs of voters in the exit poll, then a few thousand people are asked a small question, which party did you vote for. And According to this, it is estimated that millions of people must have voted. So many times he could not tell the opinion of millions of people right. Sometimes it even tells.
Three and a half thousand companies are listed in the Indian stock market. Now you cannot see the price of those four thousand companies everyday. But you need a general idea of where the market is going today. Most companies today are rising or falling. What is the sentiment / direction of the market? So basically SENSEX and NIFTY is a kind of exit poll and by its sample size it tries to predict which direction the overall market is going.
The Sensex has 30 companies and the Nifty has 50 companies. With the direction of 30 companies, the SENSEX gives you a general opinion that today the market has increased or fallen. As such, Nifty gives an opinion on the market movement from a sample of 50 companies. Most of the time it happens that these 50 companies are going where they are, because it is the 50 largest companies in the Nifty, the same goes to the entire market. This happens 70 to 60% of the time, but it is not necessary to happen every time. That is why you do not have to rely on B for Sensex or Nifty. It is simply an index created to give you ideas in a general short time to save your time.
So now we know what is Sensex and Nifty
There are 30 big companies in the Sensex and 50 big companies in the Nifty. We take the example of SENSEX, there are 30 companies in SENSEX according to free float market capitalization. That is why we talk about market capitalization first.
What is market capitalization?
Like how much is the price of 1 share of the company. For example, the price of a company's share of that company is 20 rupees. And how much is the total shares of that company. So if a company has 5 shares, one share price is 20 rupees, then the price of share x number of shares, 5 x 20 = 100 rupees. So 100 rupees is the market capitalization of that company. But only market capitalization does not make companies involved in SENSEX. So free float market capitalization is required to join the SENSEX.
What is free float market capitalization?
The market capitalization of free float, which survives by removing the shares of the owners. As a company has 5 shares, the owners of the company hold 3 shares, they have never landed those shares in the market through the stock exchange. So the 3 shares that the owners of the company have will decrease. That means now the company has 5 shares which is one for 20 rupees, 3 shares of it is with the owners. The free float market capitalization count of this company will be 2 shares, which is with the public, x 20 rupees, ie 2 x 20 = 40 rupees. The free float market capitalization of this company is 40 rupees.
So there are 30 companies in the Sensex whose free float market capitalization is the highest. 30 such companies come with different sectors, which has the highest weightage of financial services in India, banks have similar companies. I.T. It also has a high weightage. So there are 30 big companies which are part of the SENSEX according to the free float market capitalization. And as per the top or bottom 30 big companies, it is decided that today the Sensex will go up or down.
Nifty 50 in NSE
Similarly, in NSE, which is Nifty, 50 such companies are selected. 50 large companies according to free float market capitalization. So the difference is that the Sensex has 30 companies and the Nifty has 50 companies. And that's why each time these two indexes do not grow in the same proportion. Sometimes the Sensex stays above 1%, then the Nifty stays above 0.5%. Because Nifty has more than 20 companies.
I think your question is solved now "What is Sensex and Nifty". In this article i am trying to give information of share market for beginners.
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