10 August,2026 05:17 PM IST | Mumbai | mid-day online correspondent
Representational Image. Pic: Pexels
A benchmark index in the stock market is a reference point for measuring the performance of a stock or a portfolio. It is a collection of stocks that reflects how the particular sector or specific market is performing. The stocks can outperform or underperform the benchmark.
This benchmark helps investors to understand if their investment is doing well or poorly, as they can compare to see how much the stock has earned in reality and how much it should have earned.
The Sensex and the Nifty are the two benchmark indices in India. These are the broad benchmark indices that most investors track as it reflects the economy on the whole. There are other sector specific indices as well such as banks, IT or market capitalisation-based such as midcap, small cap etc. for investors to get sector specific insights.
The Sensex is the benchmark index of the Bombay Stock Exchange and is the oldest benchmark index in the country. Introduced in 1986, the Sensex comprises 30 largest, most liquid and financially sound companies listed on the Bombay Stock Exchange.
It is a leading indicator of the economic trend and investors track the index to understand the overall trend in an industry. The companies need to be large cap or mega cap to be part of the Sensex and are generally from across sectors. The base value of calculating Sensex is 100.
The Nifty is the benchmark index of the National Stock Exchange. Introduced in 1996, it comprises 50 stocks across diverse sectors such as financial services oil, gas and consumable fuels, information technology, automobile and auto components, fast moving consumer goods, telecommunication, healthcare, metals and mining, construction, consumer durables, consumer services, power, construction materials, services and capital goods.
This diversification helps it to provide a broader picture of the market performances. In terms of sectoral share, financial services account for 36.18 of the index's weight, as on July 31, 2026. The base value of calculating Nifty is 1000.
Both the Sensex and the Nifty are calculated using the free float market capitalisation method. In this, the company's market value is calculated using only the shares available for public trading.
