What Are Indices? Sensex, Nifty 50 and Sectoral Indices
Written by Pradnya Surana
4 min read | Updated on November 27, 2025, 16:21 IST
Indices and Their Significance
If you follow financial news, you for sure must have heard terms like Sensex, Nifty, Bank Nifty and a few others. Phrases like ‘the Sensex rose 500 points today’ or ‘the Nifty closed in the red’ are common phrases of Indian financial news. But why do these indices matter to Indians, why so many of us watch it closely and why, in general, are they the indicators of India's economic health?
Let's understand the meaning and significance of these indices.
Understanding Stock Market Indices
A stock market index is a measuring tool that tracks the performance of a predetermined group of stocks. In this group of stocks, each stock is given a different weight. The more the company’s valuation, the more weight it is given.
The value of the Index is now derived by calculating the weighted average of these constituent companies.
This means larger companies have a greater influence on the index's movement than smaller ones.
The Sensex - India's Oldest Benchmark
The Sensex, short for Sensitive Index, is the benchmark index of the Bombay Stock Exchange (BSE). Launched in 1986, it tracks 30 of the largest and most actively traded companies listed on the BSE. These companies are from various sectors of the Indian economy, right from information technology and banking to pharmaceuticals and energy.
The Sensex companies are selected based on factors like market capitalisation, trading volume and their ranking in their sector. Amongst these, some companies are weighted more and some are less. As of 31st March 2025, here are the top 5 constituent companies of Sensex and their weighted average. (Source – BSEindia.com)
| Rank | Company | Approx. Weight in Sensex (%) |
|---|---|---|
| 1 | HDFC Bank | 15.08% |
| 2 | Reliance Industries | 10.13% |
| 3 | ICICI Bank | 9.67% |
| 4 | Bharti Airtel | 5.66% |
| 5 | Infosys | 5.33% |
When the Sensex moves up or down, it indicates the general direction of these stocks. As these companies and their stocks are dominant, their movement indicates overall investor sentiment about the broader Indian economy.
The starting point of the Sensex is the year 1978-79, with a starting base point of 100. Today, the Sensex is valued at around 85,000 points, meaning it has grown 850 points from its base value of 100 in 1978-79, reflecting India's economic growth over the decades.
The Nifty 50 - Broader Market Representation
The Nifty 50 is managed by the National Stock Exchange (NSE), is India's other major benchmark index. As the name suggests, it comprises 50 large-cap companies, providing a broader view of the market compared to the Sensex's 30 stocks. The top 5 stocks and their weighted average in the Nifty 50
| Rank | Company | Nifty 50 Weight (%) |
|---|---|---|
| 1 | HDFC Bank | 12.78% |
| 2 | Reliance Industries | 8.53% |
| 3 | ICICI Bank | 8.14% |
| 4 | Bharti Airtel | 4.75% |
| 5 | Infosys | 4.53% |
It was launched in 1996 with a base value of 1,000. It covers 13 sectors of the Indian economy, providing a broader picture of market performance than the Sensex.
The Nifty is popular amongst traders and fund managers for derivatives trading and benchmarking portfolio performance. Many mutual funds and exchange-traded funds (ETFs) are composed similarly to the Nifty 50 and replicate the Nifty's performance
Sectoral Indices: Tracking Specific Industries
Apart from Sensex and Nifty50, which represent all sectors, there are some sectoral indices that comprise stocks from that particular sector. Like,
Bank Nifty
tracks the banking sector's performance. It includes both public and private sector banks.
Nifty IT
comprises only information technology companies. By its nature, this index is heavily influenced by global technology trends and rupee-dollar exchange rates.
Nifty Pharma
monitors pharmaceutical and healthcare companies. This index garnered specific importance during the pandemic.
Nifty FMCG
tracks fast-moving consumer goods companies such as Hindustan Unilever and ITC. It comprises the consumer goods sector companies.
A few other sector indices are Nifty Auto, Nifty Metal, Nifty Realty and Nifty Energy. These indices help investors identify which sectors are outperforming or underperforming compared to the overall market.
Indices serve multiple purposes for investors. When you track a particular stock or a mutual fund against the index, you come to know how your stock or mutual fund is performing as compared to the overall sector and broader economy. They provide a quick snapshot of what is happening in financial markets and thereby, a country’s overall economic health. Indices are growing, which means companies are growing means the overall economy is growing.
About Author
Pradnya Surana
Sub-Editor
is an engineering and management graduate with 12 years of experience in India’s leading banks. With a natural flair for writing and a passion for all things finance, she reinvented herself as a financial writer. Her work reflects her ability to view the industry from both sides of the table, the financial service provider and the consumer. Experience in fast paced consumer facing roles adds depth, clarity and relevance to her writing.
Read more from Upstox
Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.