A market index is a single number that tracks a chosen group of stocks together, so you can see how the overall market (or a part of it) is moving without checking every stock one by one. India's two best-known indices are the Nifty 50 and the Sensex.
What does an index actually measure?
An index bundles a set of stocks and combines their prices into one figure. When that figure goes up, the group of stocks it tracks has, on average, gone up; when it falls, they've fallen. This gives you a quick read on market direction. "the market was up today" usually means an index like the Nifty 50 closed higher.
What are the Nifty 50 and the Sensex?
- Nifty 50, tracks 50 of the largest, most-traded companies listed on the National Stock Exchange (NSE). It's the NSE's benchmark index.
- Sensex, tracks 30 large companies listed on the Bombay Stock Exchange (BSE). It's the BSE's benchmark index.
Both are made up of big, established companies across different industries, so they're widely used as a snapshot of how India's larger companies are performing.
Are there other indices?
Yes. Beyond the broad benchmarks, there are sector indices (for example, one that tracks only banking stocks) and indices for different company sizes (large-cap, mid-cap, small-cap). Each one tracks a different slice of the market.
Can I buy an index directly?
You can't buy an index itself. It's just a measure. But you can take a view on one indirectly, for example through index derivatives (Futures & Options) or index-based funds. To follow an index live, you can add the Nifty 50, Sensex or other indices to your watchlist on Rupeezy.
Things to keep in mind
- An index shows the average direction of its group. Individual stocks can move very differently from the index on the same day.
- The companies inside an index are reviewed and updated periodically, so the list isn't fixed forever.
- A rising index doesn't mean every stock rose, and your own holdings may not move with it.
Read next
What are sectors, and why do stocks in a sector move together? — Indices group by size, sectors by business — and a sector tends to move as a pack.