The Nifty and Sensex are the most popular Stock Market Indices in India. They are designed to capture the state of the stock market in one single number and are often referred to as the barometers of growth of the economy. If you notice that the Index is down for the past year, you may be able to say that the economy is not in great shape. You can also watch the index to see if your own investments/wealth is doing better/worse. Based on that, it can help you rebalance your portfolio.
Both, Nifty and Sensex are made up of companies from various sectors such as IT, Petrochemical, Auto, and Banking and comprise of the largest companies in India.
Both are designed to give you a broad picture of the stock market, and hint at the direction of the economy. Generally, on a positive day, both indices will be up, and on a negative day, both will be down.
The main difference between SENSEX and Nifty is that SENSEX is the stock market index for BSE Limited, while Nifty is the stock market index for National Stock Exchange (NSE). Another is that SENSEX is comprised of 30 stocks, while Nifty is comprised of 50 stocks.
Thus, both are equally important to investors as they achieve common goals, such as:
1. Providing a historical comparison and benchmarking returns of various forms of investments such as gold, debt, mutual fund, etc.
2. Lead indicator of the performance of the overall economy.