Stock Market Index –
Stock market index is the statistical measure that shows changes happening in the market. To make an index, some similar types of stocks are selected from the securities listed on an exchange and combined together.
Stock market index will appear like a barometer that shows an overall condition of a market. They will facilitate the investors to categorize the general market pattern. And investors will take stock market as their reference and will decide which stocks to invest in.
The main criteria of selection for stock can be the kind of industry, size of a company and market capitalisation. The stock market index value is computed by using values of its underlying stocks. If there is any change in underlying stock prices, it will impact an overall index value. Suppose prices of these underlying securities increase, index will also increase.
Thus, the stock index reflects the market sentiment and the direction of movements of the products in the commodities, financial, and other markets.
Some notable stock indices in India include:
- Benchmark indices are BSE Sensex and NSE Nifty
- Broad-based indices are BSE 100 and Nifty 50
- Indices based on the market capitalization like BSE Midcap and BSE Smallcap
- Sectoral indices are CNX IT and Nifty FMCG Index