What is Nifty?

About Nifty:

• NIFTY is a market index introduced by the National Stock Exchange (NSE).
• It is a blended word – National Stock Exchange and Fifty coined by NSE.
• Nifty was established in 1996 under the name CNX Nifty. Further, in 2015, it was renamed Nifty 50.
• NIFTY 50 is a benchmark-based index and the flagship of NSE.
• It represents the performance of the 50 largest and most actively traded stocks listed on the NSE.
• These 50 largest companies are from different industrial sectors and collectively represent the Stock Market and Economic Trends of India. 
• It is one of the two main stock market indices in India, the other being SENSEX, a product of the Bombay Stock Exchange (BSE).

What is a Stock Index?

• A stock index is a measurement of the changes that take place in the stock market.
• It measures price movement and market performance.
• To create an index, one has to group some stocks from a list of stocks with similar characteristics. 
• This grouping of stocks can be based on the type of industry, total market capitalization, or size of the company. 
• Calculation:
  • To calculate the value of the stock market index, one can use the values of the underlying group of stocks.
  • Any change in the value of the underlying stock also leads to a change in the stock index value.
  • If the price of most of the stocks rises, the index will again rise and vice-versa. 
• Thus, an index is indicative of changes in the market.
• It reflects the overall market's investment sentiment and price movements.