Stock Index, SENSEX And NIFTY

The stock market index functions as a indicator of the general economic scenario of a country. If stock market indices are growing, It indicates that the overall general economy of country is stable if however the index go down it shows some trouble in economy.

Types of Indices For the entire world ( global indices) For an entire continent ( regional indices – for example S&P Latin america 40) For an entire country ( national indices – for example Sensex & Nifty for India ) For a particular sector in a country – ( sectoral indices – for example BSE BANKEX which tracks top banking companies in India) For any other theme / group of economy / companies you want to track. ( example Dow Jones Islamic world market index)

Construction of Stock Index A stock index is created by choosing high performing stocks. Index can be calculated by two ways by considering the price of component stock alone. By considering the market value or size of the company called market capitalization method. Two main stock index of India are Sensex and Nifty. Both index gives general idea about whether most of the stocks have gone up or most of the stocks gone down. The SENSEX is an indicator of all major companies of the BSE and the Nifty is an indicator of all major companies of the NSE. Both Index represent the top stocks at National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The word Nifty can be taken from word national and fifty while Sensex abbreviated as Sensitive index. sensex and nifty, bse nse, stock market, Share Market India

Stock Exchange

Stock exchange is a market in which stocks Bought or sold. In Brief stock exchange provides services for stock brokers and traders to trade stock, bonds and securities. Stock exchanges also provide facility for issue and redemption of securities and other financial instruments. To be able to trade in stock on certain stock exchange it must be listed there. Stock exchange basically serves as primary markets where corporations, governments and incorporate bodies can raise capital by channeling savings of investors and secondary markets where investors can sell their securities to other investors for cash thus reducing the risk of investment and maintaining liquidity of system. Trades in older exchanges are conducted on the floor of exchange itself by shouting orders and instructions called outcry system. On modern exchange system trades are conducted over telephone or online. A stock exchange need not be treated as place of speculation or gambling. It should be act as a place of safe and profitable investment. Stock exchanges are the financial barometers of national economy of country. Industrial growth and stability is reflected in the index of stock exchange. Buying and selling transaction in securities at the stock exchange are governed by the rules and regulations of stock exchange as well as Security exchange board of India (SEBI) guidelines. There are 24 stock exchange of India, among them two are national level namely Bombay Stock Exchange (BSE) and National stock Exchange of India (NSE). The rest 21 are Regional Stock Exchange.