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Trading and Investment Terms

Indices

Stock market index is a measure of the relative value of a group of stocks in numerical terms. Some stocks which are listed on the exchange are selected and grouped together to form an index. When the stocks within an index change their value, index value changes. For example BSE Sensex in a stock market index which consists 30 stocks when these 30 stocks change their value the value of BSE changes. Typically stock market index is the weighted average of some selected stocks. Stock market index is a tool which is used by the investors and financial managers to describe the particular market and to compare the returns on a specific investment. Stock market index is important to measure the performance of investments against a relevant market index. Some of the important stock indices in India are: � BSE Sensex � NSE Nifty � BSE Smallcap � BSE Midcap � BSE 100 � BSE 500 � BSE Bankex � CNX IT