Question

index in stock market?

Answer 1

Index is the face of stock market and to realize indexing in stock market an investor himself would require years of experience. To give a general idea one can say that indexing in stock market is done in order to give a person (can be an investor or any person) an idea on the performance of a particular set of stock in a specified period of time (mostly real time basis). Virtually you can imagine set of stocks by companies are put into a particular box and they are weighed using particular scales (scales based on price, scales based on market capitalization etc). Then the current weight of the box is continuously projected on a graph where the value on scale is plotted against time.

Answer 2

Index of a stock market is no doubt a score board of the performance of a stock exchange. But there are many types of indices in stock market that help in understanding projections of performance of various sector based companies. An index may consist of stock from best performing companies of different sectors all put together or at the same time it may also consist of stock from the same sector from different companies. It may sound simple but there are many parameters of share that are to be considered while preparing a stock market index.

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