Indices: Nifty, Sensex, and what they measure

An index is a basket of stocks combined into one number, meant to represent "the market" or a slice of it, so you can gauge overall direction without checking hundreds of individual prices.

Nifty 50

The NSE's flagship index — the 50 largest, most liquid companies listed on the exchange, weighted by market capitalisation (bigger companies move the index more). "The market was up today" in Indian financial news usually means the Nifty 50 was up.

Sensex

The BSE's equivalent — 30 large, established companies. Nifty and Sensex almost always move together, since they're drawn from an overlapping pool of India's biggest companies.

Sector indices

Narrower baskets — Bank Nifty (banking stocks), Nifty IT, and others — let you see how one industry is doing, separate from the broad market. If Bank Nifty is falling while the Nifty 50 is flat, that tells you something specific about banking, not the market overall.

The limit of an index

An index tells you about its constituents, weighted by size — it says nothing directly about a stock that isn't in it, and a market-cap-weighted index is disproportionately driven by its largest few members.