INDICES.

What are Indices?

Indices A stock index also called a stock Indices, is a statistical measure that reflects changes in the market. It is created by grouping similar stocks from among those that are publicly traded, and the selection criteria can be the size of a company, its market capitalization, or the type of industry. Changes in the price of the underlying securities will affect the overall value of the index. If prices go up, the induced will also go up.



What types of stock indices are there?

There are different types of stock indices depending on the type of stocks that are considered when creating the index. Here's a more detailed look at some of the most common types of indexes.

1.Benchmarks like BSE Sensex and NSE Nifty

2.Broader indices like Nifty 50 and BSE 100

3.Indices based on the market capitalization of companies such as BSE Midcap and BSE Small cap

4.Industry-specific indices such as Nifty FMCG, Nifty Bank Index, CNX IT, and S&P BSE Oil and Gas, Vix, Gr30, Dax

S&P ESB Sensex

Sensex is a mixture of two words: sensitive index. This stock index was introduced in 1986, making it the oldest stock index in India. The BSE Sensex is made up of the 30 largest stocks traded on the Bombay Stock Exchange (BSE). Since Standard and Poor's (S&P), an international rating agency, gave ESB its technical expertise to create the index, it is always referred to with the S&P label in its name.

CNX NIFTY (NIFTY 50)

Also known as the NSE Nifty, this index was first created in 1996. This stock index consists of the 50 largest stocks traded within the NSE. NIFTY is owned and managed by India Index Services & Products Limited (IISL), a joint venture between the Indian rating agency CRISIL and the National Stock Exchange. Actually, CNX part of CNX NIFTY stands for CRISIL and NSE.

Why do we need indices?

Stock indices are necessary to know the sentiment of the market. As an investor, you can see the market structure from the indices and decide which stocks can become a winning bet. Indices not only help you focus on the stocks you want to invest in, but they also serve as a barometer to compare with your peers. If a stock has outperformed the index, it is said to have outperformed it. Stock indices also help you identify trends in a particular industry and make investment decisions accordingly. Read More...

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