Umaima Hafeez

22698

Understanding of Stock Market Index

An index is a method to track the performance of a group of assets in a standardized way.

Indexes typically measure the performance of a basket of securities intended to replicate a
certain area of the market. Indexes in financial markets are often used as benchmarks to
evaluate an investment’s performance against. A tool widely used by financial institutions
and investors to compare the return on specific investments and to describe the market.

A national index represents the performance of the stock market of a definite country and
reflects the sentiment of investors on the state of the economy. National indices include the
stocks of large companies listed on the nation’s largest stock exchanges.

In Pakistan Stock Exchange KSE 100 is the most recognized index. Which includes the
largest companies on the basis of market capitalization. KSE 100 Index stocks has a
representation of all the market sectors of PSX. The Index represents 85% of all the market
capitalization of the Exchange

KSE 30 Index includes the top 30 most liquid companies listed on PSX based on Free Float
methodology.

KMI 30 includes the companies that has been screened for Islamic Shariah criteria.