Learn how stock market indices work, why they matter and how investors use benchmarks like Nifty 50, Nifty Next 50 and Sensex to build long-term wealth.
A complete guide to understanding market indices and their role in investing.
A stock market index is a collection of selected companies that represents the performance of a particular segment of the stock market.
Instead of tracking hundreds of individual stocks, investors can use an index to understand how the overall market or a specific sector is performing.
Examples include Nifty 50, Nifty Next 50, Sensex, Nifty Bank and Nifty Midcap 150.
Stock market indices help investors measure, compare and understand market performance.
Track overall market movements easily.
Compare investments against a standard benchmark.
Index funds replicate popular market indices.
Reflects investor sentiment and economic trends.
Nifty 50 is India's most widely followed stock market index.
It tracks 50 of the largest and most liquid companies listed on the National Stock Exchange (NSE).
Because it represents multiple sectors of the economy, Nifty 50 is often considered a barometer of the Indian stock market.
Nifty Next 50 consists of the next 50 largest companies after the Nifty 50.
These companies are often viewed as future large-cap leaders, as many eventually become part of the Nifty 50.
The index provides exposure to fast-growing businesses with higher growth potential, although it may experience greater volatility than Nifty 50.
Sensex is India's oldest and most recognized stock market index.
Maintained by the Bombay Stock Exchange (BSE), it tracks 30 large and actively traded companies across major sectors of the Indian economy.
Investors often use Sensex alongside Nifty 50 to assess the overall performance of the Indian stock market.
Both are benchmark indices, but there are important differences.
Index providers follow a structured methodology to build and maintain indices.
Select all eligible listed companies.
Check liquidity, trading history and eligibility.
Based on free-float market capitalization.
Top companies are chosen for the index.
Each company receives proportional weight.
Indices are reviewed and rebalanced regularly.
Tracks India's 50 largest listed companies.
The next 50 companies after Nifty 50.
Tracks 30 leading companies on BSE.
Represents medium-sized companies.
Represents emerging small companies.
Tracks major banking companies in India.
Use our calculators to estimate potential outcomes and understand different investment approaches.
Index Funds are subject to market risks but offer diversification across multiple companies.
Index Funds are often considered beginner-friendly due to their simplicity and diversification.
Many Index Funds allow SIP investments starting from ₹100–₹500.
ETFs trade on exchanges while Index Funds are purchased through mutual fund platforms.
Explore more educational resources, calculators, and practical guides designed to help you become a confident long-term investor.
This content is intended solely for educational and informational purposes and should not be construed as investment advice, a recommendation, solicitation or an offer to buy or sell any securities or mutual fund products. Investments in securities markets are subject to market risks. Read all scheme related documents carefully before investing. Past performance of any index or investment does not guarantee future results.