Stock Market Indices in India and Abroad, Economics of Capital Market

Stock Market Indices in India and Abroad
Stock market indices are used to represent the performance of a group of stocks that are considered to be a representative sample of a country's market or a specific sector. These indices help investors understand the general direction and performance of the market.
Stock Market Indices in India:
1. SENSEX (Sensitive Index):
o The SENSEX is the benchmark stock index of the Bombay Stock Exchange (BSE). It consists of the top 30 large-cap companies listed on the BSE and is one of the oldest stock indices in India, launched in 1986.
o Key Features:
 The SENSEX is calculated based on the free-float market capitalization method.
 It represents various sectors such as IT, finance, healthcare, energy, etc., and reflects the overall performance of the Indian economy.
 Companies included in the SENSEX are blue-chip stocks, generally considered to be stable and well-established.
2. Nifty 50:
o The Nifty 50 is the benchmark index of the National Stock Exchange (NSE). It includes the 50 largest and most liquid stocks listed on the NSE.
o Key Features:
 Like the SENSEX, Nifty is also calculated based on free-float market capitalization.
 It is used by investors to assess the overall performance of the Indian stock market.
 Nifty 50 represents a diverse range of sectors, including finance, technology, pharmaceuticals, energy, etc.
Stock Market Indices Abroad:
1. NASDAQ Composite (USA):
o The NASDAQ is an American stock exchange that primarily lists technology companies.
o NASDAQ Composite is a stock market index that includes more than 3,000 companies listed on the NASDAQ stock exchange, many of which are tech giants like Apple, Microsoft, Google, and Amazon.
o Key Features:
 It is a market capitalization-weighted index, meaning that companies with higher market caps have a greater influence on the index's movement.
 The NASDAQ is known for its focus on technology, biotechnology, and internet-based companies.
2. Dow Jones Industrial Average (DJIA) (USA):
o The Dow Jones Industrial Average (DJIA), often simply called the Dow, is one of the oldest and most widely followed stock market indices in the world. It consists of 30 large, publicly-owned companies in the U.S. across various industries, except for transportation and utilities.
o Key Features:
 The Dow is a price-weighted index, meaning that stocks with higher prices have a more significant impact on the index.
 The index includes companies such as Coca-Cola, Boeing, Johnson & Johnson, and Walmart.
3. FTSE 100 (UK):
o The FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange (LSE) based on market capitalization.
o Key Features:
 It includes blue-chip companies in sectors such as banking, energy, pharmaceuticals, and telecommunications.
 The FTSE 100 is capitalization-weighted, meaning that companies with larger market values have a higher influence on the index.
 Companies in the FTSE 100 include HSBC, BP, Unilever, and GlaxoSmithKline.
4. Nikkei 225 (Japan):
o The Nikkei 225 is a stock market index for the Tokyo Stock Exchange (TSE) and represents the 225 largest and most liquid companies in Japan.
o Key Features:
 It is a price-weighted index, similar to the DJIA, where higher-priced stocks have a more significant impact on the index.
 Major companies included in the Nikkei 225 include Toyota, Sony, Mitsubishi, and Honda.
Comparison of Key Indices:
Index Country No. of Stocks Sector Focus Weighting Method
SENSEX India 30 Diverse (mostly large-cap companies) Free-float Market Cap
Nifty 50 India 50 Diverse (mostly large-cap companies) Free-float Market Cap
NASDAQ Composite USA 3,000+ Technology, Biotech, Internet Market Cap Weighted
Dow Jones USA 30 Diverse (large U.S. companies) Price Weighted
FTSE 100 UK 100 Diverse (large UK companies) Market Cap Weighted
Nikkei 225 Japan 225 Diverse (large Japanese companies) Price Weighted