What are Nifty and Sensex?

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But if you have to pick the top 30 stocks, or look at what the bottom 100 are doing, it will be difficult for you to siphon through this huge number of companies listed. What indices like Nifty and Sensex do is to group them together.

Nifty 50 is a collection of the top 50 companies listed on NSE and Sensex is a collection of the top 30 stocks listed on BSE by way of market capitalisation. The top companies are the ones that influence the stock market the most and influence the country’s economy the most. Hence an index with the top and largest companies is the best gauge for how the entire stock market.

There is also BSE500, Nifty Midcap, BSE Smallcap and many more such indices. However, Nifty 50 and Sensex are primary benchmarks.

How do you make money?

There are two ways

1. Stock investors: Stock investors are those who keep their money in the stock for a longer period of time, sometimes even years. Returns are compounded over a period of time. Investors use fundamental analysis. They look at the growth trajectory of the company because your investment literally grows with the company in the long term.

2. Stock traders: Stock traders generally buy and sell within the same trading session. Traders use technical analysis to understand which stocks to invest in. Traders look for short and quick gains. Stock trading basics will require you to learn technical indicators like momentum oscillators, Bollinger bands, charts and more.