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The short term and the long term fluctuations in prices of securities
are indicators of the variations in the economic variables.
STOCK MARKET INDEX
A stock market index is a method of measuring a section of the stock
market. Many indices are cited by news or financial services firms and
are used as benchmarks, to measure the performance of portfolios
such as mutual funds.
Stock market indices are useful in understanding the level of prices and
the trend of price movements of the market.
A stock market index acts the indicator of the performance of the
economy or a sector of the economy.
STOCK MARKET INDICES:USEFULNESS
BSE SENSEX & NSE-NIFTY are two major market indices in India.
Their usefulness:
Indices help to recognize broad trends in the market.
The investor can use the indices to allocate the funds rationally among
the stocks.
Technical analysts use these indices to predict the future market.
Indices function as a status report on the general economy.
BSE SENSEX consists 30 stocks:
Adani Ports | Asian Paints | Axis Bank | Bajaj Auto Ltd | Bharti Airtel
Ltd | Cipla Ltd | Coal India Ltd | Dr. Reddy's Laboratories Ltd | GAIL |
HDFC | HDFC Bank | Hero Motocorp | Hindustan Unilever Limited |
ICICI Bank | Infosys | ITC | Larsen | Lupin Ltd. | M&M | Maruti Suzuki |
NTPC Ltd | Oil and Natural Gas Corporation Ltd | Power Grid
Corporation of India | Reliance Industries Ltd | State Bank of India |
Sun Pharmaceutical Industries Ltd | Tata Motors Ltd | Tata Steel Ltd |
Tata Consultancy Services Ltd | Wipro Ltd
NSE NIFTY consists 50 stocks:
ACC Limited | Adani Ports & SEZ Limited | Ambuja Cements Ltd. | Asian
Paints Ltd. | Axis Bank Ltd. | Bajaj Auto Ltd. | Bank of Baroda | Bharat Heavy
Electricals Limited | Bharat Petroleum Corporation | Bharti Airtel Ltd. |
Bosch Ltd. | Cairn India Ltd. | Cipla Ltd. | Coal India Ltd. | Dr. Reddy's
Laboratories Ltd. | GAIL (India) Ltd. | Grasim Industries Ltd. | HCL
Technologies Ltd. | HDFC Bank Ltd. | Hero MotoCorp Ltd. | Hindalco
Industries Ltd. | Hindustan Unilever Ltd. | Housing Development Finance
Corporation Ltd. | ITC Limited | ICICI Bank Ltd. | Idea Cellular Ltd. | IndusInd
Bank Ltd. | Infosys Ltd. | Kotak Mahindra Bank Ltd. | Larsen & Toubro Ltd. |
Lupin Limited | Mahindra & Mahindra Ltd. | Maruti Suzuki India Ltd. | NTPC
Limited | Oil & Natural Gas Corporation Ltd. | PowerGrid Corporation of
India Ltd. | Punjab National Bank | Reliance Industries Ltd. | State Bank of
India | Sun Pharmaceutical Industries Ltd. | Tata Consultancy Services Ltd. |
Tata Motors Ltd. | Tata Power Co. Ltd. | Tata Steel Ltd. | Tech Mahindra Ltd. |
UltraTech Cement Ltd. | Vedanta Ltd. | Wipro | Yes Bank Ltd. | Zee
Entertainment Enterprises Ltd.
Calculation of stock
indices
Sensex/Nifty is calculated using the “Free-float Market Capitalization”
methodology. As per this methodology, the level of index at any point
of time reflects the Free-float market value of 30/50 component stocks
relative to a base period.