What is the Difference between Nifty and Sensex?

There are thousands of companies listed on stock exchange. It will be very difficult to track every stock that trades on an exchange. Therefore a small sample of the companies in the market is taken which is a representation of the whole market. This small sample is called an index. It is a statistical measure of the change in a portfolio of companies stocks which represent a portion of the overall market.

Difference between Nifty and Sensex

Sensex and Nifty are both large-cap index and from different exchanges that is BSE and NSE respectively.  They are the indicators of market behavior and give an idea whether most shares have gone up or down. Usually, it is used as a benchmark for portfolio performance. The index gives the comparison of returns on investment with other asset class like real estate, gold, bond, or debt.

The index committee which is made up of academicians, financial journalists, mutual fund managers, and independent governing board members choose the ‘sample’ companies that are listed. Sometimes there is change in these listed companies and is notified.

Nifty

National Stock Exchange Fifty is in short called Nifty50. It is a stock market index of National Stock Exchange and called Nifty50. NSE is located at Bandra Kurla Complex, Mumbai. It is a market-weighted stock index of 50 (previously 51) companies that are selected on basis of performance and financial soundness. These companies represent 24 industrial sectors.

Highlights

  • It came into existence in 1996 the base year 1995 = 1000
  • Previously it was named CNX Nifty, but from Sept. 2015 it was renamed Nifty50.
  • It is the biggest capital market of the country and one of the fastest.
  • It introduced the fully automatic electronic trading system in the country.
  • Depository services are offered through NSDL (National Securities Depository Limited).
  • Nifty is calculated using the free-float market capitalization weighted method. 50 constituent stocks (51 previously) are chosen.

Sensex

Let us start with Sensex. Full form of Sensex is “Sensitive Index”. It is a stock market index of Bombay Stock Exchange and called BSE Sensex. BSE is located at Dalal Street, Mumbai. It is a market-weighted stock index of 30 companies that are selected on basis of performance and financial soundness. They are large companies which are well established financially. These companies represent 13 industrial sectors.

Highlights

  • It came into existence in 1986, the base year 1978-79 = 100.
  • It is older than Nifty. It is the oldest financial market in the country.
  • Depository services are offered through CDSL (Central Depository Services Limited).
  • Free-float market capitalization method is used for calculating Sensex. 30 constituent stocks are chosen.
  • Free float stands for the stocks that are there for trading. Lock-in shares are not considered as free float.
  • Market capitalization is the combined worth of all stocks of different companies that are within the stock exchange.

If you are interested in trading shares and not sure which shares to sell/buy you can contact us through phone us or email us. We provide trading tips after doing fundamental and technical analysis of the company and changes in government rules and/or policies. There are many services that we offer in categories like equity, derivative and MCX. You can also avail our two days free trial by filling up the fields and submitting it.

Why do futures traders fail?

Futures are the financial contracts whereby the buyer is obliged to purchase an asset or the seller is obliged to sell an asset which can be a financial instrument or physical commodity. The transaction takes place at a predetermined future date and value. It is mentioned in the contract the quantity and quality of the asset in question. To facilitate trading on the future the assets are standardized. Some future contracts call for physical delivery of the asset while others are settled in cash.

futures traders

It is seen, many futures traders make a decent profit when they start trading initially and latter encounter endless string of losses. Sometimes their losses are so huge that they eat away their trading capital too. There are common pitfalls that you must know so you can avoid them.

You can decrease your loss and improve your odds for successes. We have discussed some common futures trading mistakes here that beginners usually make.

Not sticking to the strategy once it is made

Most of the traders have a strategy in place which helps them select trades as to keep loss minimum. When they are implementing their strategies and it starts showing fruits many traders start deviating or altogether  abandon the strategy and jump to some another one. By doing so they let emotions (greed, overconfidence) to creep in which ultimately leads to losses.

Not using buy/sell limits

Like all other trading activities, futures trading also involve a certain degree of risk and it is important to protect yourself. There are a few ways one can protect himself/herself. You can limit your buy or sell to a certain value so that your loss is in your comfort level. In other words, in the eventuality of loss you can withstand it financially. You can use hedging strategies like buying puts. The steps that you take to protect yourself will help keep loss to a minimum and it will maximize your profits.

Not concentrating properly

Futures trading require your full attention to read and evaluate markets effectively. There may be some distractions which are unavoidable and you can cut down on other few distractions, fewer the better.

Not open to new ideas

As everything change with time, so does the stock market. You may think of yourself as a great trader but there is always a new idea cropping up that can help you improve upon your results. Many a time traders think that they know a lot of things and there is nothing left for them to learn. As market condition change these types of ‘stubborn’ traders are left behind and they get only loss. If you welcome changes with open arms and embrace it in the way you trade, you will be able to change with the markets and profit consistently.

Alliance Research, under its derivative segment, provides intraday stock futures trading tips to traders. Our research team works for identifying movements in the futures market on an intraday basis. We provide recommendations that enable traders to earn maximum returns. Even help them reduce the risk. As per market movement, we provide 2 – 3 intraday future market calls and update you on important news and information.