In order to understand the difference between BSE and Nifty, it is important to first understand what these terms mean. BSE stands for Bombay Stock Exchange, while Nifty stands for National Stock Exchange of India Limited. The two indices are different in terms of their constituents as well as their methodologies. BSE is a collection of 30 stocks from various sectors, whereas Nifty is a collection of 50 stocks that are representative of 12 sectors.
The way in which the two indices are calculated is also different. The BSE Sensex is weighted according to market capitalization, while the weightage of individual stocks in Nifty changes every quarter based on their float-adjusted market value.
What is BSE?
BSE Limited (formerly Bombay Stock Exchange) is an Indian stock exchange located at Dalal Street, Mumbai. Established in 1875, BSE (formerly known as Bombay Stock Exchange) is Asia’s first and now the world’s 10th largest stock exchange by market capitalization with an average daily turnover of over US$17 billion. BSE has been a pioneer in technology and it has set several benchmarks for other exchanges across the globe. The BSE S&P Sensex, BSE’s flagship index, is India’s most widely tracked equity index. BSE provides an efficient and transparent market for trading in equity, debt instruments, derivatives, mutual funds, IPOs, and exchange-traded products. BSE also offers an extensive range of other services such as market data information, indices, corporate benefits service, and more. BSE is committed to providing the highest levels of service and partners with leading technology providers to offer innovative solutions that address the unique needs of its customers. BSE is also working on developing new products and services to meet the changing needs of its customers.
What is Nifty?
Nifty is a Japanese stock market index that includes the top 225 companies listed on the Tokyo Stock Exchange. It is a price-weighted index, meaning that each company’s share price is multiplied by the number of shares outstanding to calculate its weight in the index. Nifty is widely used as a benchmark for Japanese stocks and is often compared to other major indexes such as the Dow Jones Industrial Average and the S&P 500. Nifty has a base value of 1000 as of April 1985, and it is calculated using Shinzo Maeda’s method. Nifty is owned and maintained by Nippon Telegraph and Telephone.
Difference between BSE and Nifty
BSE, formerly known as Bombay Stock Exchange, is the oldest stock exchange in Asia with a rich history dating back to 1875. Nifty is comparatively newer, having been established in 1995. BSE is home to more than 5,800 listed companies with a market capitalization of over US$2 trillion, while Nifty has around 1,600 companies listed with a market cap of US$1.3 trillion. BSE Sensex, the flagship index of BSE, is widely followed by investors across the globe and is considered to be a barometer of the Indian economy. Nifty 50, on the other hand, comprises the top 50 companies listed on National Stock Exchange and is used as a benchmark index by many investors. Both BSE and Nifty offer a wide range of products including equity derivatives, currency derivatives, interest rate futures, etc. that allow investors to hedge their portfolio against market risks. BSE also has an MoU with the European exchange Euronext for cross-listing of products and collaboration in technology and product development.
Conclusion
The BSE Sensex is a collection of 30 stocks from various sectors of the Indian economy, while the Nifty 50 is made up of 50 stocks. The BSE Sensex is weighted more towards financials and energy, while the Nifty 50 has a broader mix of sectors. The BSE Sensex is older and more established than the Nifty 50. Over time, as India’s economy has grown, so too has the composition of the two indices changed. As of July 2017, the largest sector in terms of market capitalization on the BSE Sensex was technology, followed by finance and then automobiles.
