NIFTY is index for Indian equity market. If NIFTY's value goes up, we can assume overall market is going up and similarly for downward movement. NIFTY keyword has origin in US market during 60s. Investors of those days had informal identification of top 50 stocks group for investment. The acronym NIFTY stands for National Index Fifty.
National Stock Exchange (NSE) owns and manages NIFTY. NIFTY has 50 stocks representing large cap companies and diverse sectors of the economy. Actual process of computation is a bit complex. However, for simple understanding it is average price of top 50 companies' share's price.
-What is the basis of top 50 companies' selection? Is it fixed?
First criteria is capital size of the company and then NSE also looks for representation from all leading sectors. It is not fixed, owning authority reviews every 3 month for new set of 50 stocks. However, changes are not very radical in nature. See NSE website for detail process.
-Is it the only index in Indian equity market?
No, we have SENSEX managed by BSE and SX40 from MCX-SX.
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