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

NSE AND BSE

In previous post we have discussed about stock exchange.  Two main stock exchange of India are NSE and BSE. Here we will discuss about them briefly.

National Stock Exchange

National stock exchange in short NSE is the largest stock exchange of India and world third largest stock exchange in terms of number of trade. It is situated in Mumbai and was incorporated as a tax paying company in 1992. In April 1993 NSE was recognised as stock exchange under securities contract act 1956.    

The main objective behind NSE is to establish trading facility nationwide for all types of securities. NSE has national reach to major market segments like equity or capital markets, futures and options or derivatives market, Initial public offerings and so on.

Bombay Stock Exchange

Bombay stock exchange is the oldest stock exchange in Asia that was established in 1875. BSE located in Mumbai, It is world third largest stock exchange in terms of stock listing.

NSE's primary index is NSE NIFTY and BSE Primary index is BSE SENSEX. Nifty is also called fifty share index, 50 companies stocks are listed on Nifty. BSE SENSEX is also called 30 share index as 30 stocks are listed on this index.  Both indices are considered to measure market trend. 

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.

What is Stock Market?

Hello Friends, Good Afternoon this is my first post on this blog. The aim of this blog is to educate traders and investor who want to start or started investing and trading in Indian share market. We discuss basic terms, news, updates and many things which are related to and affect stock market and capital market.

 To start firstly we have to know what stock market is.

In general terms a stock market is place where
stocks or shares of company are bought and sold, through stock exchange. In broad sense stock market is primarily a virtual exchange of securities and derivatives. Stock market lists the securities or shares of publicly traded companies. In next session we discuss what stock is and why companies issue stock?

Thank you