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Market Indices in India

In: Business and Management

Submitted By ashaantov
Words 5256
Pages 22

A stock market index is created by selecting a group of stocks that are capable of representing the whole market or a specified sector or segment of the market. The change in the price s of this basket of securities is measured with reference to a base period. There is usually provision for giving proper weights to different stocks on the basis of their importance to the economy. A stock market index acts as the indicator of the performance of the overall economy or a sector of the economy.
An Index is used to give information about the price movements of products in the financial, commodities or any other markets. Financial indexes are constructed to measure price movements of stocks, bonds, T-bills and other forms of investments. Stock market indexes are meant to capture the overall behaviour of equity markets.
Stock market indexes are useful for a variety of reasons. Some of them are:
• They provide a historical comparison of returns on money invested in the stock market against other forms of investments such as gold or debt.
• They can be used as a standard against which to compare the performance of an equity fund.
• It is a lead indicator of the performance of the overall economy or a sector of the economy
• Stock indexes reflect highly up to date information
• Modern financial applications such as Index Funds, Index Futures, Index Options play an important role in financial investments and risk management

Further the different indices in the Indian makerts mainly in NSE and BSE are discussed.


In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced exchange with 1016 companies listed and 726 trading members.
The NSE is...

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