The Sensex and Nifty are both Indices. The Sensex, also called the BSE 30, is a stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange (BSE). The Nifty, similarly, is an indicator of the 50 top major companies on the National Stock Exchange (NSE).
**`Sensex in layman language`**
Sensex stands for SENSitivity indEX. In simple terms, sensex is a indicator or index to show the daily price movement of select shares (called blue-chip shares). The opening price and closing price of shares (increase or decrease) with respect to the average / base price determines this. The select shares (blue chips) are selected on the basis of their performance / company turnover / number of shares being traded in stock exchange. In case of National Stock Exchange (NSE), this index is called as NIFTY. Sensex is nothing but an economy parameter.
The Sensex has a very important function. The Sensex is supposed to be an indicator of the stocks. It is supposed to show whether the stocks are generally going up, or generally going down.