Sensex and Nifty.

You have heard of 

You might have heard of others like S&P 500 and Nasdaq.

What are these? Why are they important?

An index or indices (plural) is calculated using a group of stocks.

Example:

-Sensex is based on the 30 biggest companies in India.
-S&P 500 is based on the 500 biggest companies in the USA.

These are the most popular indices. There are many more like these.

Purpose of index: they help us understand how a certain group of stocks is doing.

Example:

-Bank Nifty index shows us how the banking sector is doing.
-Sensex shows how the overall market is doing (since it is made up of the 30 biggest companies in India).