Till now we have discussed what are stocks and why do companies issue stock. Another two most important terms related to stock market are "Sensex" and "Nifty". Without these two terms one can't even talk about Stock Market. Actually when one talks about Stock Market its somehow always related to Sensex and Nifty.
Sensex and Nifty basically both are "index" that is indicator. They majorly indicates whether the overall stocks have gone up or most of the stocks have gone down.
Sensex and Nifty are the two most important stock exchanges in India. Although there are many more like Calcutta Stock Exchange etc. but they are not as important as these two. Sensex means Bombay Stock Exchange that is BSE and Nifty means National Stock Exchange that is NSE.
Sensex is an indicator of all the major companies of the BSE and Nifty is the indicator of all the major companies of NSE. When ever a company declares itself as "Pvt Ltd. " it is basically eligible to be mentioned in stock market. The owner of the company has to register it in either BSE or NSE.
Once the company is registered in any of these two, it means anytime company can float its share in the market when needed.
If Sensex goes up it means most of the major companies of BSE have gone up and if it goes down it means most of the major companies of Sensex have gone down. Similarly it applies to Nifty also. Both Sensex and Nifty indicates whether there major stock rates have increased or decreased.
There is another index that is also very important to know while you talk about stock market and that is BSE mid-cap index. BSE mid-cap index was introduced by BSE to track the performance of the companies with relatively smaller market capitalization.
Over the years BSE midcap has proven a great utility from the point of investing community.
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