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Karnivesh

Simplifying finance.... • 3m

When I first started following the stock market, I assumed NIFTY and Sensex represented the entire market. Green meant the market was up, red meant it was down. Simple. Over time, I realised that wasn’t the full picture. These indices don’t track every company. NIFTY follows 50 large, actively traded firms on the NSE, while Sensex tracks 30 on the BSE. They are indicators, not the market itself. What stood out was how they are calculated. Only free-float shares, those available for public trading are considered. Promoter holdings are excluded, which means companies with higher free-float values influence index movement more. Indices are also reviewed and updated so they remain relevant. 📌 My takeaway: If you want to understand the market better, don’t just watch the index, understand what’s inside it. 🔗 The attached link explains how these indices are calculated.

https://www.karnivesh.com/post/understanding-market-indices-in-india-what-are-nifty-sensex-and-how-are-they-actually-calculated

2 Replies

Replies (2)

Rahul Agarwal

Founder | Agentic AI... • 3m

Great explanation! Understanding what drives indices like NIFTY and Sensex is key to making informed market decisions.

Nirav Satya

Software Reviewer | ... • 3m

I was also surprised in my initial days.. Sensex & Nifty were consistently falling for 2-3 weeks. While my portfolio was performing well at 23% growth, effortlessly. I realised the same, that day!

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