Equity indices are formed by a fixed number of constituent stocks to reflect investor sentiment in the economy. An index can also be sector-specific - Nifty Bank, Nifty Metal, Nifty FMCG etc. which reflect investor sentiment in a particular industry.
Now, futures are derivative contracts that obligate the parties to transact an asset at a pre-determined future date and price. Such contracts require the buyer to purchase or the seller to sell an underlying asset at a pre-set price, regardless of the current market price on the date of expiry.
In India, Nifty and Bank Nifty are most traded index futures currently. Traders read volume, price and open interest data in these contracts to draw out critical signals on the possible forward movement on the market.