Major Indian Indices and Their Applications
India's main benchmark indices are Nifty 50 and BSE Sensex (broad market), Bank Nifty (sector), Nifty Next 50, Nifty 500, Nifty Midcap and Smallcap series. Each...
Indian Equity Benchmarks
India's main benchmark indices are Nifty 50 and BSE Sensex (broad market), Bank Nifty (sector), Nifty Next 50, Nifty 500, Nifty Midcap and Smallcap series. Each serves as a performance yardstick, portfolio benchmark and basis for derivatives, ETFs and index funds.
Nifty 50 tracks the 50 largest and most liquid free-float stocks on NSE — it is the basis for the world's most actively traded equity index option. BSE Sensex tracks 30 large stocks on BSE. Bank Nifty (Nifty Bank) tracks 12 banking stocks and is the most liquid sectoral derivative in India. Indices are maintained by IISL (for Nifty family) and Asia Index (for Sensex). Applications include benchmarking fund performance, passive investing via ETFs (e.g., Nippon India ETF Nifty BeES), index-linked structured products and — most importantly for F&O candidates — the underlying for futures and options contracts.
50 largest stocks — the most-traded Indian index option globally
12 banking stocks — used for macro rate/credit views
30 stocks, longer history (since 1978-79 base)
Every major index has a listed ETF tracking it
A Practical Example
An FII expects RBI to cut repo by 25 bps at its next MPC meeting — good for banking stocks. Instead of buying 12 individual banks, it buys Bank Nifty futures — one trade, instant exposure to HDFC Bank, ICICI, SBI, Axis, Kotak, IndusInd, PNB, BoB, AU SFB, Federal Bank, Bandhan, IDFC First. That is "using the index as an underlying for derivatives" — Application #3 in the NISM workbook.
What Makes This Important
Frequently Asked Questions
These are sectoral indices used to track the performance of specific sectors. They serve as benchmarks for sector funds and as underlyings for a handful of sector-specific ETFs. None of them currently have exchange-traded derivatives — Bank Nifty is the only liquid sector derivative in India.
🧠 Quick Quiz
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