What is Nifty and how it works (Difference between Nifty and Sensex) – Nifty 50

Bank Nifty Kya Hai:

Whenever the news of the stock market comes in the news, you must have often heard the word Nifty, in the news anchors say that today Nifty has increased by so many points, today Nifty has fallen by so many points, then your mind At some point of time the question would arise that after all this Nifty50. For those who do not have much information about the stock market, this question is bound to arise in their mind.

If you are also in doubt about this thing and want to know about Nifty then you have come to the right article. In today’s article, we will tell you what is Nifty, how Nifty works, how Nifty is formed, how Nifty is calculated, how to invest in Nifty, and what is the difference between Nifty and Sensex.

If you want to get all the above information about Nifty then you have to read this article till the end. So friends without wasting time let’s start this article of today – Bank Nifty 50 .

What is Nifty

sequence

1 What is Nifty

2 What is the full form of Nifty (Full Form Of Nifty )

3 How Nifty Works

4 What is Bank Nifty (What Is Bank Nifty )

5 How is Nifty formed?

6 How is Nifty calculated?

7 How to invest in Nifty

8 Advantages of Nifty

9 Difference Between Nifty And Sensex – Difference Between Nifty And Sensex 

10 Common Questions Related to Nifty

11 You Learned: What is Nifty 

11.1 Related Articles 

Nifty is made up of two words National and Fifty. It is also called Nifty 50 but usually, most people call it Nifty.

Nifty is a major benchmark index (sensitive index) of the National Stock Exchange, India’s largest stock exchange, which includes the top 50 companies registered on the NSE. There are fluctuations in Nifty based on the performance of these 50 companies in the market, the performance of NSE is revealed by the fluctuations in Nifty.

NSE started Nifty in 1996. The top 50 companies from 12 different sectors are included in the Nifty.

Simply put, the Nifty is an index (index) of the National Stock Exchange (NSE), in which the best 50 companies of NSE are included.

What is the full form of Nifty (Full form of Nifty )

The full form of Nifty is National Stock Exchange Fifty. NSE is a stock exchange and Fifty means 50 shares. Thus Nifty means 50 shares of the National Stock Exchange.

How Nifty Works

The main function of Nifty is to provide information about the top 50 companies listed on the National Stock Exchange. Through the Nifty index, it is found how the performance of the NSE stock market is.

If the companies listed in Nifty benefit, then the share price of the companies also increases in the market, due to which the price of Nifty also increases, and there is a boom in Nifty.

If the companies listed in Nifty make less profit, then the share price of the companies falls in the market, due to which the share price of Nifty also decreases. Then it is said that Nifty has declined.

The main purpose of Nifty is to provide information about the performance of the NSE stock market. So this is how Nifty works.

What is Bank Nifty

Another term used a lot with Nifty is Bank Nifty. It is also called Nifty Bank. Let’s know about it too.

Bank Nifty was started by the Indian Index Service Product Limited (IISPL) in the year 2000. Bank Nifty includes the shares of the 12 largest banks in the banking sector of India, which are listed on the NSE.

Bank Nifty provides information about the banking sector, by looking at Bank Nifty, it is found out whether there is a growth in the banking sector or not. The fluctuations in Bank Nifty also affect the Nifty 50, because Bank Nifty includes the 12 largest banks in the banking sector of India, and all of them are also included in Bank Nifty 50.

How is Nifty formed?

There are more than 1600 companies listed in NSE, out of which the top 50 such companies are included in Nifty whose shares are bought and sold the most. All these 50 companies are selected from 12 different sectors, and all of them are the biggest companies in their sector. Their market capitalization is about 60 percent of the entire market.

There is an index committee to select the top 50 companies in Nifty, which includes officials from departments like government, banks, mutual funds, etc. Nifty is calculated on the basis of Free Float Market Capitalization.

How is Nifty calculated?

Like Sensex, Nifty is calculated on the basis of Free Float Market Capitalization. Simply its Base Year is considered as 1995 and Base Index as 1000.

For the calculation of Nifty, first of all, the market capitalization of all 50 companies included in Nifty is taken out. To find the market capitalization, the total share of the company is multiplied by the price of one share.

For example, suppose there is a company ABC which has issued 1000 shares and the price of one share is Rs 100, so the market capitalization of that company is 1000*100 = 100000.

There are many types of investors in a company, some of which are also promoters of the company whose shares are not bought and sold in the market, that is, their shares are not available for trading.

After removing the market capitalization of the company, the Free Float Market Capitalization of the company is extracted. In Free Float Market Capitalization, those shares are removed which are with the promoter or the government.

Let the promoter hold 200 shares of ABC company, then ABC’s Free Float Market Capitalization will be 800*100 = 80000.

Finally, to calculate the Nifty, the Free Float Market Capitalization of all 50 companies included in the Nifty is added, and it is divided by the Base Market Capitalization of 1995 and multiplied by the Base Index Value 1000.

Formula to calculate Nifty = (Total Free Float Capitalization/ Market Cap In 1995)*Index Value.

How to invest in nifty

Follow these steps to invest in Nifty –

• First of all, open your Demat Account from a good stockbroker. You can open your Demat account with discount stockbrokers like Upstox App and Groww App.
• Once you have opened your Demat account, the broker provides you with a platform to trade.
• Select Nifty Index Fund in the trading platform.
• After that start investing in the Nifty Index Fund.
• Before investing in Nifty, do an adequate analysis of the records, tracks, etc. of the Nifty Index Fund. In this way, you can invest in Nifty.

Advantages of Nifty

• Nifty gives us information about the performance of India’s largest stock market NSE.
• Information about the country’s economy is also easily available through Nifty. If there is a boom in Nifty, then the economy of the country also grows.
• Through Nifty, the company gets information about the advantages and disadvantages.
• Nifty also gives an idea of ​​the ups and downs in the market.

Difference between Nifty and Sensex 

Both Nifty and Sensex are also the two largest stock market indices in India. Both of them give information about the performance of companies listed on their respective stock exchanges. But there are also some differences between these two, which we will understand through the table below.

Common questions related to Nifty

You learned: What is Nifty 

If you are interested in the share market then you should be constantly updated about Nifty and Sensex, to know about Nifty and Sensex you can watch news channels, read blogs related to sharing market, and watch YouTube videos Huh.

By understanding about Nifty and Sensex, you can take a better decision to invest in the stock market. Because you get almost complete information about the stock market from Nifty and Sensex.

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