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What are DALAL STREET, NIFTY, and SENSEX?
Dalal Street, Nifty, and Sensex: What do they mean?
Dalal Street is a famous street in Mumbai, India, known for the Bombay Stock Exchange (BSE) building. "Dalal" is a Hindi word for "broker". Just like "Wall Street" in the United States, "Dalal Street" represents India's main stock market.
Nifty and Sensex are two important indexes that measure the performance of the Indian stock market. Nifty is the index for the National Stock Exchange (NSE), while Sensex is the index for the Bombay Stock Exchange (BSE). Think of them like report cards for the stock market, showing how well the market is doing.
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What are Nifty and Sensex?
Understanding Sensex and Nifty: A Beginner's Guide
To grasp Sensex and Nifty, you need to know about India's stock exchanges. There are two main exchanges:
Bombay Stock Exchange (BSE): Located in Mumbai, it's Asia's oldest stock exchange, established in 1875. It's also one of the fastest in the world!
National Stock Exchange (NSE): This is the other major exchange in India.
What is Sensex?
Sensex, also known as BSE 30, is a group of 30 top companies listed on the BSE. These companies are chosen based on their market value and represent various sectors. Sensex helps measure the overall performance of the stock market.
How does Sensex work?
The base year for Sensex is 1978-79, with a starting value of 100.
When the Sensex goes up, it means most Indian stocks have also increased in value.
When the Sensex goes down, it means many major stocks have decreased in value.
Example: If Sensex drops from 30,000 to 29,500, it means the majority of the 30 companies' stock prices have fallen.
National Stock Exchange (NSE) and NIFTY
India's top stock exchange, located in Mumbai
Started in 1992 to promote competition in the stock market
First electronic exchange in India, offering easy trading facilities
12th largest stock exchange globally, with a market capitalization of over $1.41 trillion (as of March 2016)
NIFTY:
The benchmark index for India's equity market
Managed and owned by India Index Services and Products (IISL)
The base year is 1995, with a base value of 1000
Calculated based on 50 actively traded stocks from 24 sectors
Understanding NIFTY and NSE:
Both Sensex and NIFTY indicate market movement
When NIFTY goes up, it means most stocks on the NSE have increased in value
When NIFTY goes down, it means most stocks on the NSE have decreased in value
An increase in Sensex or NIFTY indicates economic growth, while a decrease indicates a recession
Importance of Market Index:
Acts as a barometer for market behavior
Provides an overall idea of market trends
Used as a benchmark for portfolio performance
Reflects investor sentiments
Used for comparison and sorting of companies
Used in passive fund management by index funds
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