Things to Consider When Calculating Index

An index is a measure of something. In finance, it refers a statistical measure of changes in the securities market. Nowadays, the stock market is a place where a majority of people interested. We know that you have thousands of queries related to Index Calculation. In this post, we have tried to explain the calculation of Index. You can also use Custom Index solution to calculate the index.

Now, the stock market is a place where people can make large money. At the same time, the possibility of losing money is very high. Without adequate knowledge of a stock market, investing huge money is not a right decision. Before you start trading, you need to have an idea about the market such as how it works and how trading is done. Here, we will help you to understand about the calculation technique of Index and Index Maintenance.

Overview of stock:

The stock is the smallest unit of ownership of the business. In other others, a stock is a share in the company's ownership, and it is also called as equity and share. When you purchase a stock of the company, it means that you are one of the owners of the company. When speaking technically, a shareholder of a business owns the same part in all tangible and intangible assets of the company such as furniture, building, trading, etc. In our country, there are many stock exchanges such as NSE, BSE, Bangalore stock exchange, etc. Among those, BSE and NSE are the major stocks used by us.

SENSEX:

Sensex (sensitive index) represents Bombay Stock Exchange (BSE). It also indicates all the leading companies of BSE. With the help of share prices of thirty prominent businesses that listed in BSE, Sensex is calculated. When Sensex rises, the major companies shares also rise and vice versa.

NSE:

NSE stands for Nifty and is a leading index for large firms in the National Stock Exchange of India. Nifty comprises of fifty companies that represent 24 sectors of the economy. Using the base year 1995 and index value 100, Nifty is calculated.

Factors for selecting stocks to calculate index:

Here, we provide certain factors to consider when calculating the index.

  • History of listing
  • Track record
  • Market capitalization
  • Industrial representation
  • Frequency of Trading

Source : https://smartbetaindex.quora.com/Things-to-Consider-When-Calculating-Index