What is Securities Market index?
A securities market index is a way to measure how the securities market is doing overall or in a specific area. It's like a gauge of how well the economy is doing. When the securities market index goes up, it means investors are feeling positive about the market. On the other hand, when the index goes down, it means investors are feeling negative or not confident about the market.
In India, the major indices are the S&P BSE Sensex and the NSE Nifty 50.
S&P BSE Sensex:
The S&P BSE Sensex is the oldest and most popular securities market index in India. It includes 30 big and well-known companies from different sectors of the Indian economy. The Sensex shows how these top 30 companies are performing. If these companies are doing well, the Sensex will go up. If they are not doing well, the Sensex will go down.
NSE Nifty 50:
The NSE Nifty 50 represents the performance of the top 50 largest and most frequently traded companies listed on the NSE. It's another index that shows how these companies are doing in the market.
There are also other indices in India that focus on specific sectors, like the BSE Healthcare Index, BSE Banker Index, and NSE IT Index. These sectoral indices are helpful for investors who want to concentrate on a particular industry or sector.
Uses of indices
- Indicator of market movement:
When the value of the index goes up, it means that the securities market as a whole or that particular sector is performing well. When the index value goes down, it means that the securities market or that sector is not doing well.
- Tracking performance:
Investors can use securities market indices to track the performance of the securities market and make informed investment decisions. Some investment vehicles, like mutual funds, must compare their performance with one of the benchmark indices as per the scheme’s investment objective.
It is important to note that securities market indices are not a guarantee of future performance. The securities market is inherently volatile, and index values can fluctuate greatly in a short period of time. Investors should always do their own research and analysis before making investment decisions, or seek the help of securities market professionals.