In India many types of surveys are done, so that the opinion of the people is taken. That the practice can be amended on a particular subject, for this it is not necessary to take the opinion of all the people of the society goes.
Economic, political and scientific type surveys are done in the market. Similarly people can get an idea of how the stock market is running. The stock market performance of some companies is shown on the electronic board of the market by making groups by indexing.
The Types of Indices in stock market are there today we will try to know about the same, what are the rules for which companies are included in it. Here we are going to try to find answers to many such questions.
In India’s stock market, mainly Sensex and Nifty are considered major indexes, in which the share prices of the included companies are shown. Here we will try to know all the other indexes so that we can understand the share market as much as possible.
What is share market?-
The stock market index has to be understood before we have to know what the stock market character. Because the common man knows that shares are bought and sold in the stock market. There is not just this explanation of the stock market, many activities like bonds, commodities, derivatives go on in it. SEBI controls the whole activities of the stock market.
NSE and BSE raise money from the market through debt or by selling the company’s stake This means that the companies registered in it in India. Whatever paperwork is done for this, it is done in this stock exchange.
Shares are sold or bought mainly in two ways, one through the primary market and the other through the secondary market. This is how the share market works.
What is share market index? –
Share market index means a group of companies of any main type, which shows the situation in that sector, ie share market index. Most bought and sold companies in the stock market are included in this index.
In the stock market thousands of companies registered, it is not possible to show all of them to the investor at once. So some particularly well performing companies are included in this index. This index does not always remain the same, it keeps changing from time to time. Therefore in the stock market top well performing companies included in indexes.
How Stock Market Indexes are created –
NSE establishment In India with computer base stock market started in electronic form. Which made it very easy to do technical analysis of the stock market and started getting very accurate data. Since then different indexes started, which helped the investor in investing. Stock market made as simple as possible for you.
Many such indexes have become famous in the important stock markets of the whole world. Indexes by market capitalization, indices by sector, and benchmark indices are thus created on the computer base. The companies in these indexes keep on changing due to computer automation and set criteria.
BSE Index 30 (Sensex) –
BSE stock market considered to be the most important index and stock analyst Deepak Mohani has had a huge role in starting it. The base value of Sensex has been fixed at 100 from April 1, 1979 and in this index there are 30 such companies of BSE which have to fulfill certain criteria.
- Company must be listed on BSE
- The market capital of the company should be more than other companies
- Stock should have good liquidity i.e. cash flow should be good
- The company should perform well in its core business
- Company’s investments should be diversified and stable
- In this way the companies listed on Sensex represent 5400 companies on Sensex. Due to which there is a positive effect on the index.
NSE Index (Nifty 50) –
NSE Launched on 22 April 1996 with a base value of 1000 as the parameter and a market capitalization of 2 trillion. Nifty 50 consisted of a total of 13 sectors till April 2021, which has been created by mixing. From 2008 to 2012, this index has been reduced and other indexes have been made separately.
Because of which the market capital of this index is less than before. This index was started in which the largest shares of the National Stock Exchange are included, there are some rules of NSE to choose it, under this the companies are selected which represent the rest of the companies through this index.
This does not include the promoters’ and government’s share. The market which is available for buying and selling in the stock market is considered as market capital. Through the ups and downs of this index market, we get to see the results on the rest of the stocks of this index.
The companies which do not perform well also benefit from this, so the best companies in the market lead this index. In this, generally the market capital, the number of daily purchases and sales of the company and the performance of the company every year keeps on changing the number of shares of the company.
S&P BSE 100 Index –
S & P means Standard & Poor’s, it is an international standard company, which sets the standards of this company index, which works to provide license to the index which is made according to this standard. BSE means Bombay Stock Exchange and 100 means that many companies represent this index of Bombay Stock Exchange.
About 5400 companies are listed in BSE but only 100 companies are included in this index. With this, investors can see the good stock and its performance through the index. How will be the trend of the market every day, it keeps ups and downs of these shares.
Indexes by Market Capital –
- Large Cap Index – Companies from 7000 Crore to 20000 Crore
- Mid Cap Index – Companies from 500 Crore to 7000 Crore
- Small Cap Index – Companies up to 500 crores
This index is very important for those who have small investment and want to invest directly in the stock market, which serves as a guide as to which company or capital of the stock market is good. Big investors and financial institutions also invest on it on a large scale.
These indexes are run on the important stock markets of the whole world. Talking about India, it is considered to be the most popular stock index among investors in India. This index is also known as Blue Chip Company which is much cheaper than the big companies of the stock market and for this checking the fundamentals of the company is the most important thing.
Sector Base Index –
Sector Base Index This concept acts as a guide to the investor on how to make an investment portfolio according to his investment sector. It is carried on both the important stock markets of India, NSE and BSE.
- auto index
- bank index
- consumer durable index
- financial index
- FMCG Index
- IT index
- media index
- metal index
- oil and gas index
- Pharma Index
- private bank index
- PSU Bank Index
- reality index
Other Indexes / Other Indexes –
Here we have given above index is very important mainly for those who want to know about share market in initial days. As the experience of investing increases, you get to know other indices of the stock market from experience.
Most of the stock market’s behavior depends on the data of these indexes which we have mentioned. Those who are experts in the stock market study the stock market even more deeply. Knowing and analyzing so many indexes makes it easy for a common investor to invest.
Features of Index for India’s Share Market –
- Sensex and Nifty are considered to be the most important indices of the Indian stock market.
- Sensex and Nifty are listed on many important stock exchanges of the world.
- Sensex It is the oldest index of BSE and India.
- Nifty 50 and BSE Sensex-30 are considered to be the indices with the highest market capitalization.
- The promoters of the company and government investment are not captured in the market capital.
- Share market index gives a very clear picture of the market for the investor.
- All the stocks are affected by the impact on the index in the market, whether it is a boom or a recession.
- Stock market indexes are created primarily by stock exchanges, but many financial institutions and mutual funds create specialized indexes.
- They try to attract investors and indexes are also made through media.
In this way, here we tried to know what is the index of the stock market and how it is important for the investor. In this, many indexes are a company in itself and have been listed not only in India but in many important stock markets of the world.
The purpose of bringing different indexes in the stock market is that it is not possible for the stock market to give information about all the companies, so the more the analytical index in the stock market is known by big and small investors, the more simple the method of investment will be.
We see that this figure goes above 7000 by combining all the companies of NSE and BSE therefore it is very difficult to say how the stock market is performing only on Sensex and Nifty. That’s why different index works accurately in telling about the true condition of the stock market.
We hope that we have presented important information about the index of the stock market as well as that it will be beneficial for you to make strategies in the stock market.