SECURITY PRICE INDEX
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This document discusses various types of stock indexes and provides examples of two major Indian indexes, Sensex and Nifty. It defines an index as a statistical measure that captures market changes. There are three main types of indexes: market capitalization weighted, which gives weight based on company size; free-float market capitalization weighted, which excludes shares not available for public trading; and price weighted, which gives weight based on share price. Sensex tracks the top 30 companies on BSE using free float market capitalization, while Nifty tracks the top 50 companies on NSE using the same method. Both are important benchmarks for measuring market movements and fund performance.
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The document discusses stock market indices in India. It explains that indices like Sensex and Nifty track the performance of groups of stocks to indicate the overall stock market performance. Sensex tracks 30 stocks on the BSE, using the free float market capitalization method to calculate the index value. Similarly, Nifty tracks 50 stocks on the NSE, also using free float market capitalization. The document provides examples to demonstrate how the index values are calculated based on the selected stocks' free float market capitalizations.
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The Stock index is a barometer of nation’s economic health as market prices reflect expectation about the economy’s performance. However, it measures overall market sentiment through a set of stocks that are representative of the market and provides investors information regarding the average share price in the market. The indices of BSE and NSE reflect the overall market sentiments that is both SENSEX and NIFTY have shown up pattern when economy was good, both slowed down when there was a depression.
In this study, the emphasis is laid extensively towards analysing the component stocks of these indices. The study focuses on analysing the 30 component stocks (companies) that form the benchmark index of Bombay Stock Exchange, that is, Sensex.
These 30 stocks have been analysed on the basis of their key financials, their current market status, performance; and their future growth prospects.
On the basis of the study undertaken, the recommendations have been given for each of the 30 companies, as to whether the new investor should either buy the stock; or the existing investor should continue to hold the stock as an investment; or the investor should sell the stock or reduce his stake.
Also, few other analytical aspects, for instance, top holding by mutual funds & foreign institutional investors among the Sensex companies, Sensex reformation- the companies that had previously left or entered the market, Highest dividend paying companies of Sensex, Best performing Sensex Sectors & Sensex Performance over a period of time have also been given.
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Stock market indices are useful tools for understanding market trends and performance. The BSE SENSEX tracks 30 major companies on the Bombay Stock Exchange, with its base value set at 100 in 1978-1979. It is calculated using each company's free float market capitalization. Similarly, the NIFTY index tracks 50 major National Stock Exchange companies, with its base year being 1995 and base value at 1000. Both indices are weighted averages and act as benchmarks for measuring portfolio and economic performance in India.
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The document discusses stock market indices in India. It explains that indices like Sensex and Nifty track the performance of groups of stocks to indicate the overall stock market performance. Sensex tracks 30 stocks on the BSE, using the free float market capitalization method to calculate the index value. Similarly, Nifty tracks 50 stocks on the NSE, also using free float market capitalization. The document provides examples to demonstrate how the index values are calculated based on the selected stocks' free float market capitalizations.
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In this study, the emphasis is laid extensively towards analysing the component stocks of these indices. The study focuses on analysing the 30 component stocks (companies) that form the benchmark index of Bombay Stock Exchange, that is, Sensex.
These 30 stocks have been analysed on the basis of their key financials, their current market status, performance; and their future growth prospects.
On the basis of the study undertaken, the recommendations have been given for each of the 30 companies, as to whether the new investor should either buy the stock; or the existing investor should continue to hold the stock as an investment; or the investor should sell the stock or reduce his stake.
Also, few other analytical aspects, for instance, top holding by mutual funds & foreign institutional investors among the Sensex companies, Sensex reformation- the companies that had previously left or entered the market, Highest dividend paying companies of Sensex, Best performing Sensex Sectors & Sensex Performance over a period of time have also been given.
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STOCK MARKET INDICES
Stock market indices are useful tools for understanding market trends and performance. The BSE SENSEX tracks 30 major companies on the Bombay Stock Exchange, with its base value set at 100 in 1978-1979. It is calculated using each company's free float market capitalization. Similarly, the NIFTY index tracks 50 major National Stock Exchange companies, with its base year being 1995 and base value at 1000. Both indices are weighted averages and act as benchmarks for measuring portfolio and economic performance in India.
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- Most trading in India occurs on the two main exchanges, Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Common stock types are shares in a company's equity, while preferred stock and bonds are other fixed income securities.
- Individual investors can purchase stocks through a brokerage account linked to a trading account and demat account to hold shares electronically. Stock prices fluctuate daily based on demand and supply in the market.
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- The two major stock market indices in India are the BSE SENSEX, which tracks 30 large, liquid companies on the Bombay Stock Exchange, and the NIFTY 50, which tracks 50 large, liquid companies on the National Stock Exchange.
- These indices are calculated based on the free-float market capitalization of their constituent stocks and give important indicators about the overall performance and health of the economy.
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The document discusses stock market indices in India. It explains that indices like Sensex and Nifty track the performance of groups of stocks to indicate the overall stock market performance. Sensex tracks 30 stocks on the BSE, using the free float market capitalization method to calculate the index value. Similarly, Nifty tracks 50 stocks on the NSE, also using free float market capitalization. The document provides examples to demonstrate how the index values are calculated based on the selected stocks' free float market capitalizations.
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The document discusses stock market indices in India. It begins by defining a stock exchange and explaining key stock market terminology. It then describes how the two major Indian stock market indices, SENSEX and NIFTY, are calculated. SENSEX tracks the performance of 30 large companies listed on the Bombay Stock Exchange, while NIFTY tracks 50 large companies listed on the National Stock Exchange. Both indices are free-float market capitalization weighted and use base periods and values to allow comparison over time. The document provides details on the selection criteria for index constituents and explains the importance and usefulness of stock market indices.
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The document provides an overview of the Indian stock market, including how it functions, key terms, indices, and how to invest. It discusses that the market consists of a primary market for new stock issues and a secondary market (the stock exchange) for existing stocks. It describes common stock types and how stock price is determined by supply and demand. It also outlines reasons for stock price fluctuations, how to compute stock indices, benefits of investing, and drawbacks of the current market.
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The document discusses the differences and similarities between stocks, shares, and stock markets. It defines that a share is a unit of ownership in a company that is bought and sold, while stocks refer to the total number of shares a person owns. Both shares and stocks can be traded on a stock market, which is an organized market where securities are bought and sold. The stock market allows individuals and companies to trade shares and includes a primary market for new stock offerings and a secondary market for existing shares.
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Here are the key characteristics of deferred shares:
- Dividend is paid only after payment of dividend on preference and equity shares.
- Capital is returned only after preference shares and equity shares are fully redeemed/paid back during winding up.
- No voting rights.
- Considered as long term source of finance.
- Issued generally when a company wants to reduce its paid up capital without extinguishing shares.
So in summary, deferred shares rank below preference and equity shares in terms of dividend and repayment of capital. They have no voting rights and are typically used to reduce paid up capital.
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The document provides information on two major stock exchanges in India:
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2) The National Stock Exchange (NSE) was established in 1992 to provide nationwide trading. It launched two indices, Nifty 50 and NSE Midcap, to track movements in the stock market. Nifty 50 tracks the performance of 50 large companies and NSE Midcap tracks mid-sized companies.
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The document provides an overview of the Sensex and Nifty stock market indices in India. It discusses that the Sensex tracks the performance of the 30 largest companies listed on the Bombay Stock Exchange, while Nifty tracks the 50 largest companies listed on the National Stock Exchange. It provides details on how the indices are calculated and composed. It also discusses sectoral indices and provides examples of different sectoral indices that track specific industries.
Stock Market Indices & its fluctuation
Have you ever thought, how Stock Indices (for e.g. BSE or NSE) fluctuates? What's the actual back end calculation? Here's an attempt to explain the calculations of stock indices.
BSE and NSE Stock Exchange
This document provides an overview of the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in India. It discusses the history and functions of stock exchanges. It describes the key indices used by each exchange - SENSEX for BSE and S&P CNX Nifty for NSE - and how they are calculated. The BSE is the oldest stock exchange in Asia, while the NSE is the largest exchange in India in terms of trading volume. Both exchanges help companies raise capital and provide investment opportunities for investors.
What Are Stock Market Index_Indices_.pdf
Stock market indices are the shares of a specific group chosen based on specific factors such as the frequency of trading, the size of shares and so on. The stock market employs the method of sampling to depict the direction of the market as well as the changes by means of an index.
National stock exchange
The document discusses the National Stock Exchange (NSE) of India. It provides details about what a stock exchange is and NSE's role in facilitating trading of securities. Some key points:
NSE was established in 1992 as India's first electronic exchange. It aims to provide equal access to investors across India through modern electronic trading systems. NSE is a leading stock exchange located in Mumbai, with a market capitalization of over $1.65 trillion.
The exchange calculates various indices to track performance of sectors, themes, and strategies. Major broad market indices include Nifty 50, Nifty Next 50, and Nifty 100, which serve as benchmarks for mutual funds and portfolio performance.
About Indian Stock Exchange
It is the oldest exchange and most of the index heavy weight stocks are traded in this exchange. The BSE 30 includes the top 30 stocks by market capitalization and this represents the Indian Sensex.
S&P BSE Sensex
The S&P BSE SENSEX is India’s most tracked bellwether index. It is designed to measure the performance of the 30 largest, most liquid and financially sound companies across key sectors of the Indian economy that are listed at BSE Ltd
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Stock market.
The presentation is brief introduction to Stock market in India and gives a method of calculation of Sensex and Nifty.
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SECURITY PRICE INDEX
- 3. Contents What is Index Types of stock Index Uses of Index Stock market Market capitalization Index Free- Float market capitalization index Price weighted index Sensex Nifty
- 4. What is Index An Index is a statistical aggregate that measures change.” It is and indicator Sensex and Nifty are large capital index in India.
- 5. Uses of Index Indicator of market movement/returns It reflects highly up-to-date information Lead indicator of the economy
- 6. Stock Market A stock market is a physical place, where brokers gather to buy and sell stocks and other securities. It enables the trading of stocks Stock market indexes are meant to capture the overall behavior of equity markets
- 7. Types of Stock Index There are mainly three types of stock index 1. Market capitalization weighted index 2. Free-float market capitalization weighted index 3. Price weighted index
- 8. Market Capitalization Weighted Index Weights given based on the market capitalization Market Capitalization is the combined worth of all the stocks of different companies within the stock exchange. Market Capitalization = No. of shares ×market price of share
- 9. Free-Float Market Capitalization Index Free float concept is and index construction methodology which makes use of free float shares in the market. Free float market capitalization is the total worth of all shares of a company which are available for trading in the open market. Excludes share held by Government Directors Promoters Holding through FDI route Equity held by employee welfare trust Free-float Market Capitalization = No. of trading shares × market price of share
- 10. Price Weighted Index A price- weighted index is an index in which the member companies are weighted in promotion to the price per share Calculated by sum of the last traded price of the total no of shares divided by the no of stocks Stocks with higher price have more weights
- 11. Example
- 12. Sensex It is the market weighted stock index of 30 companies that are selected on the basic of financial soundness and performance. Usually, large and well-established companies that are representatives of the various industrial sectors are chosen.
- 13. How Sensex Is calculated The Sensex is calculated using the Free-float market capitalization method. By using base value100 (1978-79) Sensex is calculated for every 15 seconds
- 14. Question.. Suppose BSE index (SENSEX) consists of only two stocks such as ‘X’ and ‘Y’ Company ‘x’ has 10000 outstanding shares out of which only 5000 are available for trading in open market. Market price of share is Rs.100 Company ’Y’ has 5000 outstanding shares out of which 2000 shares are free float shares (open market shares). Market price of share is Rs.50
- 15. Objective To measure market movements Benchmark for funds performance For index based derivative products
- 16. Graph of SENSEX
- 17. Nifty Nifty is an indicator of all the major companies of NSE. The Nifty index is a composite of the top 50 stocks listed on the national stock exchange.
- 18. How Nifty is calculated • Nifty 50 is compound using free float market capitalization weighted method, where the total level of the index reflects the total market value of all the stocks in the index relative to a particular base period • Base year is 1995 and base value (index value) is 1000
- 19. Question.. Company ‘P’ has 20000 outstanding shares out of which only 10000 are available for trading in open market. Market price of share is Rs.100 Company ’Q’ has 15000 outstanding shares out of which 8000 shares are free float shares (open market shares). Market price of share is Rs.50
- 20. Graph of NIFTY
- 21. Difference Between Sensex and Nifty Sensex Nifty Index value of BSE Index Value of NSE 30 companies are listed 50 companies are listed narrow More broader Base index value 100 (1978-79) Base Index value 1000(1995)
- 22. Importance of Index Easy location Save times and efforts Efficiency Cross reference Reduce cost
- 23. Conclusion An index is a statistical measure of the changes in a portfolio of stocks representing the overall market