MARKET INDEX

Presented by- Beerkaran Singh Sidhu

MEANING OF MARKET INDEX
 An index which is designed to measure price changes of
an overall market, such as the stock market or the bond
market.
STOCK MARKET INDEX
 A stock market index is a method of measuring a
section of the stock market. Many indices are cited by
news or financial services firms and are used as
benchmarks, to measure the performance of portfolios
such as mutual funds.
FEATURES
 Barometer of market behavior.

 Benchmark of portfolio performance.

 Used as a underlying asset.

 Passive fund manager.

TYPES OF INDEX
1. Price weighted index:
A stock index in which each stock influences the
index in proportion to its price per share. The value
of the index is generated by adding the prices of
each of the stocks in the index and dividing them
by the total number of stocks. Stocks with a higher
price will be given more weight and, therefore, will
have a greater influence over the performance of
the index.
CONTINUED
 Market capitalization wealth index

A capitalization-weighted index is an index whose

components are weighted according to the total market
value of their outstanding shares. Also called a market-
value-weighted index. The impact of a component's
price change is proportional to the issue's overall market
value, which is the share price times the number of
shares outstanding.
S&P CNX NIFTY
 S&P CNX Nifty is a well diversified 50 stock index
accounting for 22 sectors of the economy. It is used for a
variety of purposes such as benchmarking fund
portfolios, index based derivatives and index funds.

S&P CNX Nifty is owned and managed by India Index

Services and Products Ltd. (IISL), which is a joint
venture between NSE and CRISIL.
USES
 Liquidity

 Diversification in stock exchange

 Operational issues