Stock Market Indices
Stock Market Indices
Stock Market Indices
A stock market index is a statistical measure which shows changes taking place in the stock
market. To create an index, a few similar kinds of stocks are chosen from amongst the
securities already listed on the exchange and grouped together.
The criteria of stock selection could be the type of industry, market capitalisation or the size
of the company. The value of the stock market index is computed using values of the
underlying stocks. Any change taking place in the underlying stock prices impact the overall
value of the index. If the prices of most of the underlying securities rise, then the index will
rise and vice-versa.
In this way, a stock index reflects overall market sentiment and direction of price movements
of products in the financial, commodities or any other markets.
Some of the notable indices in India are as follows:
a. Benchmark indices like NSE Nifty and BSE Sensex
c. Indices based on market capitalization like the BSE Smallcap and BSE Midcap
Founded in 1875, Bombay Stock Exchange Ltd. (BSE), is the fastest stock exchange in the
world which has the speed of 6 microseconds. It provides an efficient, integrated,
transparent and secure market for trading in equity, currencies, debt instruments,
derivatives, mutual funds. It provides an array of services like clearing, settlement, risk
management, education and market data services. It has a global reach with overseas
customers and a nation-wide presence. It provides depository services through its Central
Depository Services Ltd. (CDSL) arm. The S&P BSE SENSEX is India’s most widely tracked
stock market benchmark index. It is traded internationally on the EUREX as well as leading
exchanges of the BRICS nations (Brazil, Russia, China and South Africa).