Sensex and Nifty are indices whose upward, or downward movement determines a bullish or bearish market trend. Out of the two Indian stock exchanges, BSE is the oldest and comprises of top 30 listed companies of different niches. Sensex is the benchmark index of BSE. On the other hand, NSE contains a list of the top 50 companies from different sectors, with Nifty being its benchmark index. \u201cIn the short run, the market is a voting machine. In the long run, it is a weighing machine,\u201d said Benjamin Graham, founder of stock analysis and value investing. The Indian stock market is a massive platform with thousands of stocks listed on it. Traders and investors look out for multiple criteria to find their best bet. However, determining the correct market trend is facilitated by two market barometers \u2013 Sensex and Nifty. These two indices' upward or downward movement determines a bullish or bearish market trend. What is a stock index? An index is the subset of the stock market that determines the market\u2019s performance or price movement. An index comprises a list of well-established companies in their respective industries and is regarded as the best performance indicator of the economy. Furthermore, stocks belong to more than a specific industry like IT, automobile, banks, etc. Instead, they are picked from all the major sectors of the economy, showing a complete picture of the stock market. Apart from investing in companies, you can also invest in stock indexes through mutual funds schemes and exchange-traded funds (ETFs). There are two Indian stock exchanges \u2013 The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). BSE is the oldest stock exchange and comprises of top 30 listed companies of different niches. Sensex is the benchmark index of BSE. On the other hand, NSE contains a list of the top 50 companies from different sectors, with Nifty being its benchmark index. Now let\u2019s have a detailed analysis of what is Nifty and Sensex. What is Sensex? Also known as Sensitive Index, Sensex was coined by Deepak Mohoni in 1986. It is the main index of the oldest stock exchange in India, BSE. It comprises shares of 30 top companies of all the major sectors and is calculated using the free float market capitalization method. In simpler terms, when Sensex moves upwards, traders and investors prefer to buy the stocks, and when Sensex moves downward, traders and investors prefer to hold back their positions. The Sensex calculation formula = (Free float market capitalization of 30 companies \/ Base market capitalization) * Base value of the index What is Nifty 50? Also known as the National stock exchange fifty, Nifty is the flagship index of NSE and one of the most recognized stock indexes in India. It was established in 1996, and its other aliases are Nifty 50 and CNX Nifty. Nifty 50 comprises a list of 50 top companies from multiple industries. These companies have a large cap and majorly form three-fourths of Indian capitalization. Nifty is calculated using the free-float market capitalization-weighted method. Index services and products limited (IISL), a subsidiary of NSE, owns and manages Nifty. People often search for what is bank Nifty when studying Nifty 50. Bank Nifty is a part of Nifty 50 that comprises 12 stocks of only the banking sector. It is also referred to as a sectoral index that measures the performance of only the banking sector. Difference between Sensex and Nifty 50 The two indexes sound similar to each other in their nature of work and purpose. However, the difference lies in Sensex and Nifty meaning and working style. Below is a detailed list of differences between the two. Operated by \u2013 Sensex is the benchmark index of BSE (Bombay Stock Exchange), the oldest stock exchange in India. Nifty is operated by one of the most recognized Indian stock exchanges, NSE (National Stock Exchange). Full form \u2013 Sensex comprises \u2018Sensitive and index,\u2019 and Nifty includes \u2018National and fifty.\u2019 Aliases \u2013 Sensex is also famous as S&P BSE Sensex. On the other hand, Nifty is also known as Nifty 50 and S&P CNF Fifty. Establishment \u2013 People are often confused about when was Nifty established and when Sensex came into action. Sensex was incorporated in 1986, and Nifty 50 started in 1996. Number of constituents \u2013 Sensex comprises the top 30 companies traded actively in BSE. Whereas, Nifty constitutes the top 50 companies traded actively on NSE. Number of sectors covered \u2013 Sensex covers 13 industrial sectors. Nifty is a broader market index, so it covers 24 industrial sectors. Base value \u2013 The base value of the Sensex index is 100, and the Nifty 50\u2019s base value is 1000. Base year \u2013 The base year considered for Sensex\u2019s calculation is 1978 -1979. Whereas the base year for Nifty50 is 1995. Volume and liquidity \u2013 The volume and liquidity are comparatively lower in Sensex and higher in Nifty 50. Despite such differences, some well-established and fundamentally stable companies are a part of Nifty50 and Sensex. However, as an investor, one should know that investing only in either will allow you to contribute to the wealth creation process. Factors responsible for affecting the performance of Sensex and Nifty As you get well aware of what is Nifty and Sensex, it is essential to know the common factors responsible for affecting the performances of these indexes. Change in the rate of interest \u2013 The stock market and interest rates move in opposite directions. When there is an interest rate increase, lending becomes costlier. Hence, companies reduce their expenses, pressurizing the stock performance, leading to a fall in indices. Inflation \u2013 A rise in inflation is one of the primary reasons for the fall in the stock market. When inflation is high, investors don\u2019t have enough surplus funds to invest, and companies also have to bear the rising economic conditions. Global Economy \u2013 A change in the global economy will lead to a noticeable difference in the performance of indices. For example, a worldwide recession will lead to a performance impact on the Indian indices.