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What Is Sensex And Nifty?

Have you heard the name D-Street or Dalal Street?

What is it?

Dalal Street, located in Mumbai, India is the address of the Bombay Stock Exchange, the biggest stock exchange in India and related to several financial firms and institutions. When Bombay Stock Exchange was moved to its new location at the intersection of Bombay Samāchār Marg and Hammam Street, the street next to the building was renamed as 'Dalal Street'.
In Hindi 'Dalal' means “broker”. The term “Dalal Street” is used in the same way as “Wall Street” is used in the U.S.A, referring to the country’s major stock exchanges and overall financial system.
What is Sensex and Nifty?
Before moving ahead to this point, first of all let us understand two major names if stock exchange in India known as BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).
Bombay Stock Exchange (BSE)
  • It is an Indian stock exchange located in Mumbai, Maharashtra, India.
  • It was established in 1875 and is Asia’s oldest stock exchange.
  • It is the world’s fastest stock exchange, with a median trade speed of 6 microseconds.
  • The BSE is the world’s 11th largest stock exchange with an overall market capitalization of $1.43 Trillion as of March 2016.
  • More than 5500 companies are publicly listed on the BSE.
National Stock Exchange (NSE)
  • It is also the leading stock exchange of India, located in Mumbai, Maharashtra, India. 
  • It was started to end the monopoly of the Bombay stock exchange in the Indian market. 
  • NSE was established in 1992 as the first demutualized electronic exchange in the country. 
  • It was the first exchange in the country to provide a modern, fully automated screen-based electronic trading system which offered the easy trading facility to the investors spread across the length and breadth of the country. 
  • NSE has a total market capitalization of more than US $1.41 trillion, making it the world’s 12th-largest stock exchange as of March 2016. 
  • NSE’s index, the NIFTY 50, is used extensively by investors in India and around the world as a barometer of the Indian capital markets.
Now let's move to our main point of discussion...
Sensex is also called BSE 30, it is the market index consisting of 30 well-established and financially sound companies listed on Bombay Stock Exchange (BSE).
  • 30 companies are selected on the basis of the free float market capitalization.
  • These are different companies from the different sectors representing a sample of large, liquid and representative companies.
  • The base year of Sensex is 1978-79 and the base value is 100.
  • It is an indicator of market movement.
  • If Sensex goes up, it means that most of the stocks in India went up during the given period. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE has gone down.
For example, suppose the Sensex is 32,000 today. If Sensex drops to 31,500 tomorrow, it means that the majority of the 30 companies financial condition is not good i.e. their share price is falling down. 

Here is the list of 30 companies listed underSensex as of January 2018:
Adani Ports and Special Economic ZoneICICI Bank LtdPower Grid Corp of India Ltd
Asian Paints LtdIndusInd Bank LtdReliance Industries Ltd
Axis Bank LtdInfosys LtdState Bank of India
Bajaj Auto LtdITC LtdSun Pharmaceutical Industries Ltd
Bharti Airtel LtdKotak Mahindra Bank LtdTata Consultancy Services Ltd
Coal India LtdLarsen & Toubro LtdTata Motors Ltd
Dr Reddy’s Laboratories LtdMahindra & Mahindra LtdTata Motors Ltd DVR
HDFC Bank LtdMaruti Suzuki India LtdTata Steel Ltd
Hero MotoCorp LtdNTPC LtdWipro Ltd
Hindustan Unilever LtdOil & Natural Gas Corp LtdYes Bank Ltd
Housing Development Finance Corp
What is NIFTY?
NIFTY which is also called NIFTY 50 is the National Stock Exchange of India’s benchmark stock market index for Indian equity market. Nifty is owned and managed by India Index Services and Products (IISL).
  • The base year is taken as 1995 and the base value is set to 1000.
  • Nifty is calculated on 50 stocks actively traded in the NSE
  • 50 top stocks are selected from 24 sectors.
Here is the list of 50 companies listed under Nifty as of January 2018:

Adani Ports and Special Economic Zone Ltd.HDFC Bank Ltd.NTPC Ltd.
Ambuja Cements Ltd.Hero MotoCorp Ltd.Oil & Natural Gas Corporation Ltd.
Asian Paints Ltd.Hindalco Industries Ltd.Power Grid Corporation of India Ltd.
Aurobindo Pharma Ltd.Hindustan Petroleum Corporation Ltd.Reliance Industries Ltd.
Axis Bank Ltd.Hindustan Unilever Ltd.State Bank of India
Bajaj Auto Ltd.Housing Development Finance Corporation Ltd.Sun Pharmaceutical Industries Ltd.
Bajaj Finance Ltd.I T C Ltd.Tata Consultancy Services Ltd.
Bharat Petroleum Corporation Ltd.ICICI Bank Ltd.Tata Motors Ltd.
Bharti Airtel Ltd.Indiabulls Housing Finance Ltd.Tata Motors Ltd DVR
Bharti Infratel Ltd.Indian Oil Corporation Ltd.Tata Steel Ltd.
Bosch Ltd.IndusInd Bank Ltd.Tech Mahindra Ltd.
Cipla Ltd.Infosys Ltd.UPL Ltd.
Coal India Ltd.Kotak Mahindra Bank Ltd.UltraTech Cement Ltd.
Dr. Reddy’s Laboratories Ltd.Larsen & Toubro Ltd.Vedanta Ltd.
Eicher Motors Ltd.Lupin Ltd.Wipro Ltd.
GAIL (India) Ltd.Mahindra & Mahindra Ltd.Yes Bank Ltd.
HCL Technologies Ltd.Maruti Suzuki India Ltd.Zee Entertainment Enterprises Ltd.
Nifty and Sensex both are the indicators of market movements. With respect to NIFTY and SENSEX we can simply say and understands that:
  • Nifty goes up means that, the stock price of most of the major stocks on NSE has gone up.
  • Nifty goes down means that, the stock price of most of the major stocks on NSE has gone down.
  • When NIFTY and SENSEX both increases shows the economic growth of the country.
What Is The Importance of Market Index?
  • Market indexes are the barometer for the market behavior. It gives a general idea about whether most of the stocks have gone up or gone down.
  • Often, Market Index is used as a benchmark portfolio performance.
  • It is used as a reflector of investor’s sentiments.
  • Market indexes are used for sorting and comparison of the various companies.
  • They are used in passive fund management by Index funds.
I hope that you are clear with the basic idea of NIFTY and SENSEX which we frequently use to hear daily in our life. 

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Difference Between Price, Cost And Value

Price, value and Cost are the most frequent words we use to hear now and then from our friends or family members. Be it a product, service, property, investment etc. this three are the most common words used to describe a particular point. 

But, do you know that all this three values are not at all same???

Do you know that you can't use any word at anytime???

All this three terms are totally different and are applicable differently at different time and for different product.

Today, in this article I will try to explain all this three terms and there differences in a very easy language possible.

Whenever we went to the market to purchase anything we see that there are millions of products with different shape, size, color, features, brands etc. from which we have to select an item. While going through a product first question comes in our mind is - What is the price of this product? then, What would be the cost of this product? then, What is its value for me? There are slight difference between all these three terms - price, cost and value which are very much important to know. So let's have a look on it.
First of all let's understand this three terms can be very basically and simply understood as,

Price: Price is the money paid to the seller.

Cost: Cost is the amount of inputs involved in the manufacturing of  a product.
Value: Value is what product or service pay to the customer.

Now, let's compare all these three terms on the basis of different criteria as follows:

a) Meaning:

Price is the amount paid to purchase a product.
Cost is the amount spend to manufacture a product.
Value is the utility of good or services.

b) Ascertainment:

Price is ascertained from consumer's perspective.
Cost is ascertained from producer's perspective.
Value is ascertained from user's perspective.

c) Estimation:

Price is estimated through policy.
Cost is estimated through fact.
Value is estimated through opinion.

d) Impact of variations in market:

Prices of products increases or decreases.
Cost of input rise or fall.
Prices remains unchanged.

e) Money:

Price can be calculated in terms of money.
Cost can also be calculated in monetary terms.
Value cannot be calculated in terms of money.

Key Differences Between Price, Cost And Value:

  1. Price is what we pay for goods or services; Cost is the amount of inputs incurred in producing a product by a company and Value is what goods or services pay us i.e. worth.
  2. Price is calculated in numerical terms, Cost is also calculated in numerical terms, but Value can never be calculated in numbers.
  3. Price is same for all the customers; Cost is also same for all the customers while the Value varies from customer to customer.
  4. Price is estimated through the price policy; cost is assessed on actual expenditure incurred on manufacturing a particular product, but the estimation of value is based on customer’s opinion.
  5. The Ups and downs in the market will affect the price and the cost of any product while value remains unaffected.
  6. The ascertainment of price is done with the view of the consumer; the cost is ascertained from producer’s view whereas the ascertainment of value is done from the user’s point of view. 
Examples For Better Understanding And Differentiation:

Price Vs Cost

When we purchase a car, we pay the amount for it. The amount paid by us as a customer is its Price while the amount invested by its company for manufacturing it is its Cost. The price of a product is always more than its price cost because of the addition of the profit margin of the manufacturer and dealer.

Cost Vs Value

If you are a pen manufacturer who manufactures thousand of pens everyday then the cost of its production is your companies point of concern as you can manufacture more pens at lowest prices. But, the value of the pen is decided by your customer who is the final buyer of your pen which he will use on daily basis. If he thinks that the value of your pen is worth buying then he will purchase it.

Value Vs Price

Here, lets take Water and Diamond for comparison as examples. Without water we can't survive, still its price is very low. While diamond is just a materialistic thing which is ornamented for our bodily and nobody is going to die without it still, its price is very high. Reason behind this is, value of water is very high for us, it is available at low price while diamond is priced very high but the value of it is very low for us.

I hope that you are clear with the main and basic difference between these three important terms which we use frequently in our life. If you have other examples in your mind then let us know by commenting below.

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