Nifty 50 vs Sensex: what is the difference?
Nifty 50 and Sensex both track India’s biggest companies. Here is how they differ – exchange, number of stocks and how they are calculated.
When news reports say "the market rose today", they usually mean the Nifty 50 or the Sensex went up. Both are stock market indices – a single number that tracks the prices of a group of large companies. They usually move in the same direction, but they are not the same thing.
The quick comparison
| Nifty 50 | Sensex | |
|---|---|---|
| Exchange | National Stock Exchange (NSE) | BSE (formerly Bombay Stock Exchange) |
| Number of companies | 50 | 30 |
| Launched | 1996 | 1986 |
| Base value | 1,000 (November 1995) | 100 (1978–79) |
| Calculation | Free-float market capitalisation | Free-float market capitalisation |
What an index actually measures
An index takes a basket of stocks and combines their prices into one figure. If the index rises 1%, it means the basket, as a whole, became about 1% more valuable that day.
Both the Nifty 50 and the Sensex are weighted by free-float market capitalisation. In simple terms:
- Market capitalisation is a company's share price multiplied by its number of shares.
- Free float counts only the shares available for ordinary trading – it leaves out, for example, shares held by the promoters (founders or parent companies).
So a large company with lots of freely traded shares has a bigger effect on the index than a smaller one. A 2% move in one of the heaviest stocks can move the whole index noticeably.
Why the numbers look so different
The Sensex is usually several times larger than the Nifty (for example, a Sensex reading above 80,000 while the Nifty is around 25,000). This is only because they started from different base values in different years. You can't compare the levels directly – compare their percentage changes instead. On most days those percentages are close to each other.
Why the two can move differently
- Different number of stocks: the Nifty has 50 companies and the Sensex 30, so the Nifty is slightly more diversified.
- Different weights: the same company can have a different weight in each index.
- Different sector mix: small differences in how much banking, IT or energy each index holds can make one rise more than the other on a given day.
Do the companies ever change?
Yes. Both indices are reviewed regularly, usually twice a year. Companies that have become smaller or less traded can be replaced by others that now qualify. That's why an index represents "the largest companies today", not a fixed list.
Can you invest in an index?
You cannot buy an index directly, but index funds and exchange-traded funds (ETFs) aim to copy an index by holding the same stocks in the same proportions. Their returns will be close to – but not exactly the same as – the index, because of costs and small tracking differences.
Key takeaways
- The Nifty 50 (NSE, 50 stocks) and the Sensex (BSE, 30 stocks) both track India's largest listed companies.
- Both are weighted by free-float market capitalisation.
- Compare percentage changes, not index levels.
- They usually move together, with small daily differences.