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NISM-Series-VIII: Equity Derivatives · Understanding Index

Major Indices in India: Nifty 50, Sensex and Bank Nifty

Updated 11 October 2026 · Fact-checked

Nifty 50 is NSE's 50-stock benchmark. Sensex is BSE's 30-stock benchmark. Both are free-float market capitalisation weighted. Bank Nifty tracks the most liquid large banking stocks. To solve questions, identify the exchange, the number of stocks, the weighting method and the index type: broad-based, sectoral or thematic.

Understand Major Indices in India: Nifty and Sensex

An index is a number that shows how a basket of stocks moves. In India the two flagship indices are the Nifty 50 from the National Stock Exchange (NSE) and the Sensex from the BSE. Both are used as benchmarks for the market and as underlying assets for futures and options.

The Nifty 50 has 50 stocks and is run by NSE Indices Limited. Its base date is 3 November 1995 and its base value is 1000. The Sensex has 30 stocks. Its base year is 1978-79 and its base value is 100. Both use the free-float market capitalisation method. Only shares available for public trading are counted, not promoter holdings.

Indices are grouped by purpose. Broad-based indices cover a wide slice of the market, for example Nifty 50, Nifty Next 50, Nifty 500 and Sensex. Sectoral indices cover one sector, for example Bank Nifty (Nifty Bank), Nifty IT and Bankex. Thematic indices follow a theme such as consumption or infrastructure that cuts across sectors.

Bank Nifty is the Nifty Bank index. It holds a small basket of the most liquid and large banks (12 stocks at present). Its base date is 1 January 2000 and its base value is 1000. It is a sectoral index, so it moves more sharply than Nifty 50 when banking stocks move.

Selection rules favour size, liquidity and tradability. A stock in Nifty 50 must be eligible for trading in the NSE derivatives segment and must be liquid, measured by low impact cost. Both indices are reviewed periodically (usually twice a year) and stocks are added or removed to keep the index representative. Do not memorise fine thresholds beyond what your NISM workbook states.

Key formulas to remember

Free-float market capitalisation
Free-float market cap = Price × Total shares × Free-float factor
Free-float factor is the fraction of shares available for public trading, between 0 and 1.
Index value
Index value = (Current free-float market cap ÷ Base market cap) × Base value
Used by both Nifty 50 and Sensex. Only the base date and base value differ.
Stock weight in index
Weight = Stock's free-float market cap ÷ Total free-float market cap of index
Larger free-float market cap means a larger weight and more impact on the index.
Key facts to recall
Nifty 50: NSE, 50 stocks, base 1000 at 3 Nov 1995 | Sensex: BSE, 30 stocks, base 100 at 1978-79 | Bank Nifty: NSE, 12 banks, base 1000 at 1 Jan 2000
Most factual MCQs test exactly these items.

How to solve Major Indices in India: Nifty and Sensex questions

Use this order for any question on Indian indices. It stops you mixing up the two exchanges.

  1. 1Read the question and identify the index named: Nifty 50, Sensex, Bank Nifty or another.
  2. 2Match it to its exchange: Nifty and Bank Nifty to NSE, Sensex and Bankex to BSE.
  3. 3Recall the number of stocks and the base date and base value.
  4. 4Classify the index as broad-based, sectoral or thematic.
  5. 5Recall the weighting method: free-float market capitalisation for these indices.
  6. 6For calculation questions, compute free-float market cap first, then weight or index value.
  7. 7Check each option for words like 'only', 'always' or 'full market cap' that make it wrong, and pick the best match.

Quickest way: Pair-and-count shortcut

When to use it: Use it for factual MCQs when time is short and the options look similar.

  1. Memorise the pairs: Nifty 50 = NSE = 50 = base 1000; Sensex = BSE = 30 = base 100.
  2. Remember Bank Nifty = NSE = sectoral = banks only.
  3. Eliminate any option that mixes an exchange with the wrong stock count.
  4. Eliminate options that say full market cap or equal weight for these indices.
  5. For calculations, use the ratio: new index = old index × (new market cap ÷ old market cap).

Common mistakes in Major Indices in India: Nifty and Sensex

  • Saying Sensex has 50 stocks or Nifty has 30.

    Both are flagship indices and the numbers are easy to swap.

    Fix: Link Nifty 50 with NSE and 50, Sensex with BSE and 30. The number 50 sits in the name Nifty 50.

  • Treating Bank Nifty as a broad-based index.

    It is very popular in derivatives trading, so students assume it is a general market index.

    Fix: Bank Nifty holds only banks, so it is a sectoral index.

  • Using full market capitalisation instead of free-float.

    Students remember 'market cap weighted' and forget the free-float adjustment.

    Fix: Always multiply by the free-float factor. Promoter and other locked-in shares are excluded.

  • Mixing up base values and dates.

    Both exchanges have different base years and values.

    Fix: Nifty 50 base is 1000 (3 November 1995). Sensex base is 100 (1978-79). Bank Nifty base is 1000 (1 January 2000).

  • Assuming constituents never change.

    Students see the index as a fixed list.

    Fix: Indices are reviewed periodically and stocks that fail liquidity or size criteria are replaced.

Worked examples

Example 1

A stock has a price of ₹400, 100 crore shares outstanding and a free-float factor of 0.60. The total free-float market cap of the index is ₹2,40,000 crore. What is the stock's weight in the index?

Show the solution
  1. Free-float market cap = 400 × 100 crore × 0.60.
  2. 400 × 100 crore = ₹40,000 crore.
  3. ₹40,000 crore × 0.60 = ₹24,000 crore.
  4. Weight = 24,000 ÷ 2,40,000 = 0.10.

Answer: 10%

Example 2

An index has a base value of 1000 and a base market cap of ₹25,00,000 crore. The current free-float market cap is ₹50,00,000 crore. What is the index value?

Show the solution
  1. Index value = (Current market cap ÷ Base market cap) × Base value.
  2. Ratio = 50,00,000 ÷ 25,00,000 = 2.
  3. Index value = 2 × 1000 = 2000.

Answer: 2000

Exam tips

  • Expect direct fact questions: exchange, number of stocks, base value and index type.
  • Know the difference between broad-based, sectoral and thematic with one example each.
  • NISM-Series-VIII has 25% negative marking, so skip a question only if you cannot narrow down to two options.
  • In calculations, always apply the free-float factor before finding weights.
  • Read the workbook's list of F&O indices and be able to link each to NSE or BSE.

Practice questions from Understanding Index

Major Indices in India: Nifty and Sensex: frequently asked questions

What is the difference between Nifty and Sensex?

Nifty 50 belongs to NSE and has 50 stocks with a base value of 1000. Sensex belongs to BSE and has 30 stocks with a base value of 100. Both use free-float market cap weighting.

What is the Nifty 50 eligibility criteria?

A stock must be liquid, shown by low impact cost, and must be eligible for the NSE derivatives segment. NSE Indices reviews the list periodically and replaces stocks that no longer qualify. Check your workbook for the exact thresholds.

Is Bank Nifty broad-based?

No. Bank Nifty is a sectoral index made up only of banking stocks. It is run by NSE and has a base value of 1000.

Why is free-float used instead of full market cap?

Only shares available for public trading affect prices in the market. Free-float weighting stops promoter-held shares from inflating a stock's weight.