A stock market index is a listing of stock and a statistic reflecting the composite value of its components. It is used as a tool to represent the characteristics of its component stocks, all of which bear some commonality such as trading on the same stock market exchange, belonging to the same industry, or having similar market capitalizations.
Stock market indices may be classed in many ways :-
A broad-base index represents the performance of a whole stock market
Proxy, reflects investor sentiment on the state of the economy.
The most regularly quoted market indices are broad-base indices comprised of the stocks of large companies listed on a nation's largest stock exchanges.
Some of widely followed indices are :-
American Dow Jones Industrial Average and S&P 500 Index
British FTSE 100
the French CAC 40
the German DAX
Japanese Nikkei 225
Hong Kong Hang Seng Index
Indian Stock Market Indices :
a) SENSEX : This is a index for BSE ( Bombay Stock Exchange) comprising of 30 stocks
b) S&P CNX NIFTY ( Standard & Poor Crisil NSE indeX) : This is the index of stocks getting traded at NSE ( National Stock Exchange , Delhi) comprising of 50 stocks.
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