Stock Market Indices - Details and Importance

 

Stock Market Indices - Details and Importance

There are number of companies listed on Indian stock market. Each company has their own trend and performances. Stock market indices are created to analyse the overall trend and performance of the stock market. Let’s learn more about stock market indices.

What are Stock Indices?

Stock indices are also known as Stock Index. Indices consists of companies of various segments listed on stock exchanges. Thus, it indicates the overall performance of the stock market. Indices are created on the basis of many criterions such as market capitalization, industry type, company size etc.

Nifty and Sensex are the two popular stock indices of Indian stock market. Nifty indicates the overall performance of National Stock Exchange (NSE) and Sensex indicated the overall performance of Bombay Stock exchange. Nifty consists of 50 stocks of NSE and Sensex consists of 30 stocks of BSE.

Some Popular Indices of Indian Stock Market

• Benchmark indices – Nifty (NSE) and Sensex (BSE)
• Broad indices – Nifty 50 and BSE 100
• Market capitalization-based indices - BSE Smallcap and BSE Midcap
• Sectoral Indices – Nifty Bank, Nifty IT, Nifty FMCG, CNX IT etc.

Importance of Stock Indices

Stock indices works as an indicator to analyse the overall trend and sentiments of stock market. It helps traders and investors to implement various strategies while trading or investing. As there are various indices in Indian stock market, anyone can classify and sort the stocks to invest in.
Indices also helps to compare the overall performance of various sectors like IT sector, banking sector, FMCG sector etc.

To trade or invest in stock market a demat account is required, open your demat account today with any of these stock brokers.

1. Alice Blue

2. Angel One

3. Zerodha


4. StoxKart


5. ICICI direct


Also read: Difference Between Nifty and Sensex

Related Articles