When the news says "Sensex jumps" or "Nifty falls", it is talking about a stock market index. An index is a single number that shows how the prices of a fixed group of shares are moving together. Think of it as a scoreboard for part of the market.
The two famous ones
- Sensex: made by BSE. It follows 30 large, actively traded companies listed on BSE.
- Nifty 50: made by NSE Indices (part of the NSE group). It follows 50 large companies listed on the NSE.
The list of companies in each index is reviewed regularly, so a company can be added or removed. Bigger companies count for more in the index than smaller ones, so a move in one very large company can push the whole index.
Points and percentages
News often says "Sensex up 300 points". Points are just the change in the index number. Because the Sensex is now a much bigger number than it was 20 years ago, the same number of points means a much smaller change today. That is why the percentage is more useful. A 1% move is a 1% move, whatever the level.
So when you see a big-sounding headline like "Sensex crashes 500 points", look for the percentage before deciding how big it really was.
What an index does not tell you
An index is an average. On a day the Nifty rises, many companies in it can still fall, and the other way round. It also says nothing about the thousands of smaller listed companies that are not part of it. And yesterday's direction says nothing certain about tomorrow.
There are many other indices too, for example ones that follow only banks, only IT companies, or only smaller companies. They work the same way: a fixed group of shares, turned into one number.
On our news page, you can see how different named outlets describe the same market move, side by side.