NIFTY The word Nifty originates from words, `National' and 'Fifty'. Nifty basically means the index of the most actively traded stocks from across all sectors. Nifty represents the top stocks of the NSE and when we talk about Nifty going up, it means that all the heavyweight stocks of NSE across all sectors are moving up. Most of the stock trading in the country is done through NSE and BSE.
There are other stock exchanges as well, like the Calcutta stock exchange, but they are not that popular. Nifty consists of top companies from different sectors. Nifty is computed from the performance of top stocks from different sectors. Some mutual funds use Nifty as a benchmark.
The performance of the mutual funds is assessed against the performance of the Nifty. On NSE, futures and options are available for trading with the Nifty as an underlying index. Nifty is calculated by using the market capitalization weighted method according to which weights are assigned according to the size of the company. Larger the size, larger the weightage.
12th Commerce Unit - - . . PM