How to Calculate Sensex and Nifty?

Sensex and Nifty are numbers that represent how well the Indian stock market is doing. Let’s see how they are calculated in simple terms:

Sensex Calculation:

• Sensex is calculated by the Bombay Stock Exchange (BSE).
• It includes a group of specific stocks that represent different sectors of the Indian economy.
• To calculate Sensex, we look at the total value of these stocks and how much of their shares are available for trading (known as free float).
• Each stock in the Sensex is given a weight based on its importance.
• The Sensex number is calculated by adding up the values of all the stocks, multiplied by their weights, and dividing the result by a starting value called the base value.

Nifty Calculation:

• Nifty is calculated by the National Stock Exchange (NSE).
• It includes 50 stocks that are actively traded in different sectors of the economy.
• Similar to Sensex, Nifty also considers the total value of these stocks and the proportion of shares available for trading (free float).
• Each stock in the Nifty is given a weight based on its importance.
• The Nifty number is calculated by adding up the values of all the stocks, multiplied by their weights, and dividing the result by a starting value called the base value.

These calculations are a simplified explanation of how Sensex and Nifty are derived. Please note that the actual calculations may involve more complexities, and experts provide detailed methodologies for those who want to explore them further.