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Did you know that the first ever Stock Exchange in Asia was established in 1875?

And can you guess which one it was?? It was our very own BSE, formerly known as the Bombay Stock Exchange. The story of the BSE started in 1850, when five stock brokers gathered together under a banyan tree and started trading!

Today, the BSE is the 10^th largest Exchange in the world. In its early days, it was an open outcry, floor-trading Exchange, where trading used to happen in trading pits using verbal and hand signals. Later, it switched to using an electronic trading system.

According to some reports, market analyst Deepak Mohoni coined the term SENSEX, India's benchmark stock index by BSE. In 1989, he started using the term Sensex in newspaper business columns. As with all good terms, soon other journalists started using it too. The term SENSEX is derived from the words SENSitive indEX.

The National Stock Exchange (NSE) was incorporated in the year 1992. In 1994, it started electronic or screen-based trading. In 1996, the NIFTY 50 index was launched and the NSE commenced trading and settlement in dematerialised securities. The NIFTY 50 is a benchmark Indian stock market index that represents the 50 largest Indian companies listed on the National Stock Exchange.

Although recollections differ on who coined the term NIFTY 50, it is a fact that in the 1960s and 70s, the informal term NIFTY 50 was in use in the US to denote 50 US blue chip stocks.

Just like the NIFTY 50, we have the SENSEX 30, which is a benchmark Indian stock market index that represents the 30 largest Indian companies listed on the Bombay Stock Exchange.

Now, the question is why are these two indices so important?

Since the Sensex 30 and Nifty 50 indices comprise of India’s top 30 and top 50 listed companies respectively, they act as barometers for the Indian economy. They capture the Indian economy and investor and trader sentiment.

Both indices also act as benchmarks for investment performance. This is why fund managers or investors always track their portfolios and funds’ returns against the performance of these two primary indices.

You might also be interested to know that there are different types of indices available to track; for example, sector-wise indices like Bank Nifty or BSE IT. However, for investors and traders, it’s a twin thing – Sensex 30 and Nifty 50!

(Source and credits: Sites for BSE and NSE, Investopedia, Wikipedia, livemint.com and assorted sources.)