The NSE Nifty 50, a prominent stock market index introduced by the National Stock Exchange (NSE) in India, recently achieved a significant milestone by crossing the 20,000 mark for the first time. Originally established in 1996 as CNX Nifty, it was later renamed Nifty 50 in 2015. This benchmark-based index comprises the 50 largest and most actively traded stocks on the NSE, representing diverse industrial sectors. It serves as a vital indicator of India’s stock market and economic trends. Stock indices like Nifty measure price movements and market performance by grouping stocks with similar characteristics, reflecting market sentiment and price changes.
Facts/Terms for UPSC Prelims
- Bombay Stock Exchange (BSE): The Bombay Stock Exchange is one of the oldest and most significant stock exchanges in India, known for its SENSEX index, which tracks the performance of 30 major stocks.
- Market Capitalization: Market capitalization is the total value of a company’s outstanding shares of stock. Stock indices often group companies based on their market capitalization to assess their impact on the index.
- Benchmark-Based Index: A benchmark-based index like Nifty 50 serves as a reference point to evaluate the performance of the broader stock market. It provides a baseline against which investors can measure their portfolio’s returns.
- Investment Sentiment: Investment sentiment reflects the overall attitude of investors toward the market. Positive sentiment can lead to rising stock prices, while negative sentiment can result in price declines.
- Price Movements: Price movements in stock indices are influenced by changes in the prices of the underlying group of stocks. If most stocks in the index rise, the index value increases, and vice versa, making indices valuable tools for tracking market trends.