What is the STOCK MARKET INDEX?

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Our Today's Topic, STOCK MARKET INDEX

What is the STOCK MARKET INDEX? What is the need for a STOCK MARKET INDEX? What are the benefits or use of STOCK MARKET INDEX?

If you also have some such questions related to the STOCK MARKET INDEX, then you must read this article completely,

Because Today, I am going to talk to you about this

What is the STOCK MARKET INDEX?

Index means - List or Table of Contents

And you can understand the second meaning of the INDEX - a list, and Information,

 In this way, the stock market index is the way that gives the information of a company listed in the stock market is measured by numbers or value, through the index, every minute of the boom and downturn of a company listed on a stock exchange and their stock, can be very easily understood with the help of Index.

 If the stock market index is above its previous day's points, then it can be understood that today the market is working in profit, and if the stock market index is in decline compared to the previous day, today the index numbers are falling. The market is believed to be at a loss,

 For example, if the index of the National Stock Exchange, known as NIFTY, closes at 11200 on 11 August 2020, and closes at 11300 on 12 August 2020, it can be said that today the market Business has been booming, the stock market worked in profit,

 If we talk about the Indian stock market index, then India has two major stock exchanges, and both of them have different indexes,

 First,

 1. INDEX of BOMBAY STOCK EXCHANGE, (BSE) is named - SENSEX.

BSE's INDEX or SENSEX provides information about the stock of the company LISTED on the Bombay Stock Exchange.

 It is worth noting that more than 6000 companies are listed on the Bombay Stock Exchange, but its index i.e. SENSEX is based on the top 30 companies,

 Second,

 2. INDEX of NATIONAL STOCK EXCHANGE (NSE) is - NIFTY50

Similarly, NSE's Index or Nifty provides information about the stock price of the company listed on the National Stock Exchange.

 It is to be noted that more than 2000 companies are listed on the National Stock Exchange, but its index ie Nifty-50 is based only on the top 50 companies of NSE.

What is the need for a STOCK MARKET INDEX?

 In order to understand the economic situation of a country, the change in the economy of that country can be easily understood by the CHANGES occurring in the GDP of that country, Similarly, with the help of the stock market index, the business of thousands of companies listed on a stock exchange can be easily understood at a glance,

 If we talk about why a stock market index is needed, then it is important to understand that all the companies listed on a stock exchange, some new ones and some old ones are listed, and thus the change in the business of thousands of companies is quite different. Is different,

 In such a situation, all the companies can be tracked separately, but by making the share price of all the companies together make INDEX, there can be a lot of problems, and it will become very complex, and it is very difficult to make some concrete conclusions on INDEX. Will be done,

 To make INDEX absolutely clear and easy, the index is made by mixing the top companies of different sectors, so that the changes in the business of the company of all the regions can be easily understood.

 Benefits and uses of STOCK MARKET INDEX,

 Now let's talk about, what is the benefit of the stock market index, and how it is practically used-

 To understand the changes in the capital market (stock market) -

 It is easily understood by the help of stock market index, how the capital market of a country is working,

 To know the top company of the stock market-

 The company involved in the stock market is the most prominent company in its field, and we get the information easily from the stock market index,

 For example, 50 companies included in Nifty 50 are the most traded, top and most trusted company, and its information can be easily understood by looking at the list of companies included in Nifty 50 to a new investor,

 To understand the economic TREND,

 With the help of stock market index, we can easily understand the TREND of the capital market of a country, how fast or how slow it is, and what TREND of the capital market has been in that country in the past years,

 As a Benchmark,

 It is very important for an investor to know how much he can benefit from an investment, in such a situation, the profits from all the company's shares are completely different, so with the help of the stock market index, the investor has to understand this It is easy, how much profit can he make by investing in the stock market,

 For a stock market investor, the stock market index is used as a benchmark to compare the gains from different available investments,

 An investor will invest in the stock market only when he knows that investing in the stock market benefits him more than other investments, and in such a way, the profit from the stock market is easily understood by the changes in the stock market index. can go,

 For example, if the stock market index has given a CAGR benefit of 15 to 20% in the last 20 years, while today the benefit from fixed deposits is only 7 to 8%,

 So the investor tends to invest in the stock market,

 STOCK MARKET INDEX TRADING

 One of the most popular uses of the index is the trading of the stock market index,

 You can also trade in the futures and options of INDEX in the derivatives market, and this is the most popular use of the index, and that is why the index becomes very important.

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