What do you mean by a stock index? How is it calculated?

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Solution

A stock market index is a barometer of market behaviour. It measures overall market-trend through a set of stocks which are representatives of the market. An ideal index must represent changes in the prices of securities and also shows the price movement of different classes of shares. It also indicates market direction and day to day fluctuations in stock prices common. Stock market indices used in India are SENSEX, NIFTY, etc.

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NSE Indices
$\begin{matrix} Index & Current & Previous & % Change S & P CNX Nifty & 3641.1 & 3770.55 & - 3.43 % CNX Nifty Junior & 6458.55 & 6634.85 & - 2.66 % CNX IT & 5100.5 & 5314.05 & - 4.02 % Bank Nifty & 5039.05 & 5251.55 & - 4.05 % CNX 100 & 3519.35 & 3640.35 & - 3.32 % \end{matrix}$

World Markets
$\begin{matrix} Index & Current & Previous & % Change NYSE Cornposite & 8926.88 & 9120.93 & - 2.13 % NASDAQ Composite & 2350.57 & 2402.29 & - 2.15 % DOW Jones IA & 12076 & 12318.6 & - 1.97 % S & P 500 & 1377.95 & 1406.6 & - 2.04 % Nikkei 225 & 16676.9 & 17178.8 & - 2.92 % \end{matrix}$

The above figures are taken from the website of National Stock Exchange of India. They illustrate the movement of NSE stock indices as well as world stock indices on the date indicated.

What do you mean by a stock index? How is it calculated?

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