Stock Market Index: Whai is stock Market Index, Definition And Types of Stock Market Index

Stock Market Index

A stock market index is a stock market indicator designed as a statistical measure of the performance of the entire market or a segment of the market based on a few companies listed in the market. Thus, an index is a means of evaluating the overall performance of a market or a segment of the market.

An index is a measure of overall market volatility. In addition to being a general market indicator, the index is a benchmark used to evaluate the performance of individual portfolios.

Professional money managers will always try to outperform the market, that is, they will always try to outperform the index. For example, if the value of the portfolio increases by 10% and the index rises by only 5%, it means that the portfolio is outperforming the market.

We have 2 famous indices here :

BSE Sensitive (BSE Sensex) and
S&P Nifty 50 (Nifty)

What are Stock Market Index/Indices?

Before understanding the stock market index we should know what is the stock exchange. A stock market is a place where shares, bonds, derivatives, and commodities are listed in which you can trade.

To be ready to trade(buy and sell) these securities, they have to be listed on the stock exchanges first and therefore the Securities and Exchange Board of India (Sebi), our market regulator, oversees such activities.

Nifty and Sensex are the 2 nationalized stock exchanges of India, the main indices of the NSE and BSE. Indices or index is called a group of companies of a particular class.

There are thousands of companies listed on any stock exchange and any person or institution Thousands of companies cannot be tracked daily, so thousands of companies are divided into small groups. These companies, which are divided into small groups, are called Indices or Indexes.

There are mainly 2 stock exchanges in India:

(1). (BSE) Bombay Stock Exchange.

(2). (NSE) National Stock Exchange.

Bombay Stock Exchange (BSE)

Sensex is a group of 30 most quality companies listed on the Bombay Stock Exchange. Sensex is a Full Form Sensitive Index. Sensex is the main index of the BSE. Looking at the position of Sensex, the direction of all stocks listed on the BSE can be determined.

BSE Sensex comprises 30 large-cap companies. As the name suggests, it is a major index on the Bombay Stock Exchange (BSE).

From 5000 on the BSE. Even more, companies are listed, so all companies cannot be analyzed daily. If Sensex closes on the green mark at the end of the day, then it is assumed that all the companies of BSE are positive about the market and if Sensex is red mark But if it is closed then it is assumed that all the companies of BSE are negative about the market.

National Stock Exchange (NSE)

Nifty is a group of 50 most quality companies listed on the National Stock Exchange. Nifty's Full Form National Stock Exchange Fifty is the major indices (index) of Nifty NSE with the help of which direction all companies listed on NSE are headed in which direction.

The Nifty comprises 50 large-cap companies of the National Stock Exchange (NSE).

If the Nifty is moving upwards, it is believed that the market is optimistic and all other companies can also go upwards, but if the Nifty goes downwards then it is believed that the market is pessimistic and the rest of the companies Can also go down.

Other than these two we have a few other exchanges like CSE (Calcutta Stock Exchange), MSE (Metropolitan Stock Exchange), and NCDEX (National Commodity & Derivatives Exchange Ltd.) among others.

A stock market index in India is an indicator of its respective stock exchange. Hundreds and thousands of companies are listed on both exchanges but indicators are a gauge of only a couple of top-performing companies.