6.1 – The Index
Have you heard of people saying NIFTY and SENSEX casually in a conversation and wondered what that could be? Well, they are known as indices collectively. Indices play a significant role in helping us how the markets are performing besides multiple other uses.
Let’s learn more about them in this video.
The following video will teach about the clearing and settlement of shares and transactions.
We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- An index acts as a barometer of the whole economy.
- An index going up indicates that the market participants are optimistic.
- An index going down indicates that the market participants are pessimistic.
- There are two main indices in India – The BSE Sensex and NSE’s Nifty
- An index can be used for a variety of purposes – information, benchmarking, trading and hedging.
- Index trading is probably the most popular use of the index.
- India follows the free-float market capitalization method to construct the index.
- There are sector-specific indices which convey the sentiment of specific sectors.