STOCK INDICES

RA2352011010035
NIDHARSHANAA V R

INTRODUCTION
Stock market indexes indicate a specific collection of shares chosen based on
specific characteristics such as trading frequency, share size, and so on. The
sampling technique is used in the stock market to depict market direction and
change through an index.

Meaning

A stock market index - it is a statistical source that measures financial

market fluctuations. The indices are performance indicators that indicate the
performance of a certain market segment or the market as a whole.

Equities from similar companies or those that meet an established set of

criteria are selected to create a stock market index. These shares are already traded
and listed on the exchange. A variety of factors, such as market capitalization,
industry, and segment, can be used to construct share market indices.

Every stock market index monitors the performance and price changes of the
individual stocks that make up the index. This essentially means that the
performance of the individual stocks that make up an index is exactly
proportionate to the index's success in the stock market. To put it simply, an
index's overall value increases when the stock prices in it do.

Stock market indices are considered not just an advantage but also a
necessity. The importance of stock market indices helps companies to make their
investment safer and more accessible. Having indices reduces the investors'
pressure and guides them through the first step in making stock market investment
easy. That’s not all, an investor has to understand a lot when it comes to investing.
We all know Sensex has top 30 companies, but it does not mean that these 30 are
best for your investment.

VARIOUS STOCK INDICES

United States
 S&P 500
 Dow Jones Industrial Average
 NASDAQ Composite index

Europe
 EURO STOXX 50 Price Eur
 FTSE 100
 Deutsche Boerse AG German Stock Index DAX

Asia
 Nikkei 225
 Tokyo Stock Exchange Tokyo Price Index TOPIX
 Hong kong Hang Seng Index
 BSE SENSEX
 NIFTY 50
S&P 500

The S&P 500 Index, or Standard & Poor's 500 Index, is a market-
capitalization-weighted index of 500 leading publicly traded companies in the
U.S. The index actually has 503 components because three of them have two share
classes listed.It is not an exact list of the top 500 U.S. companies by market
cap because there are other criteria that the index includes. Still, the S&P 500
index is regarded as one of the best gauges of prominent American equities'
performance, and by extension, that of the stock market overall.

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA) is a stock market index that
tracks 30 large, publicly-owned blue-chip companies trading on the New York
Stock Exchange (NYSE) and Nasdaq. The Dow Jones is named after Charles Dow,
who created the index in 1896 along with his business partner, Edward Jones. Also
referred to as the Dow 30, the index is considered to be a gauge of the broader U.S.
economy.

The DJIA is the second-oldest U.S. market index after the Dow Jones
Transportation Average. The DJIA was designed to serve as a proxy for the health
of the broader U.S. economy. Often referred to simply as the Dow, it is one of the
most-watched stock market indexes in the world. While the Dow includes a range
of companies, all of them can be described as blue-chip companies with
consistently stable earnings.

NASDAQ Composite index

The Nasdaq Composite is a stock market index that includes almost all
stocks listed on the Nasdaq stock exchange (more than 2500 stocks). Along with
the Dow Jones Industrial Average and S&P 500, it is one of the three most-
followed stock market indices in the United States. The composition of the
NASDAQ Composite is heavily weighted towards companies in the information
technology sector. The Nasdaq-100, which includes 100 of the largest non-
financial companies in the Nasdaq Composite, accounts for over 90% of the
movement of the Nasdaq Composite.

The Nasdaq Composite is a capitalization-weighted index; its price is

calculated by taking the sum of the products of closing price and index share of all
of the securities in the index. The sum is then divided by a divisor which reduces
the order of magnitude of the result.

EURO STOXX 50 Price Eur

The EURO STOXX 50 is a stock index of Eurozone stocks designed
by STOXX, an index provider owned by Deutsche Börse Group. The index is
composed of 50 stocks from 11 countries in the Eurozone. EURO STOXX 50
represents Eurozone blue-chip companies considered as leaders in their respective
sectors. It is made up of fifty of the largest and most liquid stocks. The index
futures and options on the EURO STOXX 50, traded on Eurex, are among the
most liquid products in Europe and the world.

FTSE 100
The Financial Times Stock Exchange 100 Index, also called the FTSE 100
Index, FTSE 100, FTSE, or, informally, the "Footsie" , is a share index of the
100 companies listed on the London Stock Exchange with (in principle) the
highest market capitalisation. The index is maintained by the FTSE Group, a
subsidiary of the London Stock Exchange Group. The FTSE 100 broadly consists
of the largest 100 qualifying UK companies by full market value. The total market
value of a company is calculated by multiplying the share price of the company by
the total number of shares they have issued. However, many of these are
internationally focused companies: therefore the index's movements are a fairly
weak indicator of how the UK economy is faring and are significantly affected by
the exchange rates of the pound sterling. A better indication of the UK economy is
the FTSE 250 Index, as it contains a smaller proportion of international companies.

Deutsche Boerse AG German Stock Index DAX

The DAX—also known as the Deutscher Aktien Index or the GER40—is a
stock index that represents 40 of the largest and most liquid German companies
that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index
come through Xetra, an electronic trading system. A free-float methodology is
used to calculate the index weightings along with a measure of the average trading
volume.

The DAX was created in 1988 with a starting index level of 1,163 points.
DAX member companies represent roughly 80% of the aggregate market
capitalization that trades on the Frankfurt Exchange. The index was historically
comprised of 30 companies but was expanded to 40 as of Sept. 3, 2021.

Nikkei 225

The Nikkei is short for Japan's Nikkei 225 Stock Average, the leading and
most-respected index of Japanese stocks. It is a price-weighted index composed of
Japan's top 225 blue-chip companies traded on the Tokyo Stock Exchange. The
Nikkei is equivalent to the Dow Jones Industrial Average (DJIA) Index in the
United States.
 Formerly called the Nikkei Dow Jones Stock Average (from 1975 to 1985),
it is now named after the Nihon Keizai Shimbun or Japan Economic Newspaper,
commonly known as Nikkei, which sponsors the calculation of the index. The
index has been calculated since September 1950, retroactive to May 1949. Among
the best-known companies included in the Nikkei index are Canon Incorporated,
Sony Corporation, and Toyota Motor Corporation. It is the oldest stock index in
Asia.

Tokyo Stock Exchange Tokyo Price Index TOPIX

The Topix Core 30 Index is a market index composed of 30 of the largest

companies out of the stocks listed on the First Section of Japan's Tokyo Stock
Exchange, or Topix. The Topix Core 30 is one of several different Topix indexes.

The Topix Core 30 Index is meant to measure the performance of the 30

companies, which are both highly liquid and have the largest market
capitalizations. The index is weighted by companies’ free floats.

The Topix Core 30 is an index of the 30 most liquid and highly capitalized stocks
of the over 1,500 companies listed on the Topix index.

The name Topix is an acronym for Tokyo Stock Price Index, and Topix lists all
Japanese companies of the Tokyo Stock Exchange’s First Section. Topix is one of
two widely followed index families on the Tokyo Stock Exchange, the other being
the Nikkei.

Hong kong Hang Seng Index

The Hang Seng Index (HSI) is the benchmark stock market index for the
Hong Kong financial world and is widely followed as a proxy for the Asian
markets in general. It is a weighted index of the largest companies that trade on
the Hong Kong Exchange, covering approximately 65% of its total market
capitalization. This index is thus a benchmark for blue-chip stocks, and reflects
the performance of the leaders of the Hong Kong exchange. It has four sub-sector
indexes: HSI Finance, HSI Commerce & Industry, HSI Utilities, and HSI
Properties.
The Hang Seng Index was created in 1969. It is published by a wholly-owned
subsidiary of Hang Seng Bank

BSE SENSEX

The term Sensex refers to the benchmark index of the BSE in India. The
Sensex is comprised of 30 of the largest and most actively traded stocks on the
BSE and provides a gauge of India's economy. It is float-adjusted and market
capitalization-weighted. The Sensex is reviewed semiannually each year in June
and December. Created in 1986, the Sensex is the oldest stock index in India and
is operated by Standard & Poor's (S&P). Analysts and investors use it to observe
the cycles of India's economy and the development and decline of particular
industries. The Sensex is calculated in Indian rupees (INR) and U.S. dollars. As of
Aug. 31, 2021, the mean total market cap of the index was 3.71 trillion rupees.
The top five constituents listed on the index were:

 Reliance Industries
 HDFC Bank
 Infosys
 Housing Development Finance Corp.
 ICICI Bank
 The term Sensex was coined by Deepak Mohoni, a stock market analyst in
1989. BSE Sensitive Index then was at about 750 points. It is a portmanteau of the
words Sensitive and Index.

NIFTY 50

The Nifty Fifty was a group of 50 large-cap stocks on the New York Stock
Exchange that were most favored by institutional investors in the 1960s and
1970s. Investment in these top 50 stocks—similar to blue-chip stocks of today—is
said to have propelled the American economy to its bull market of the 1970s.
Companies in this group were usually characterized by consistent earnings growth
and high P/E ratios.

The Nifty 50 stocks got their notoriety in the bull markets of the 1960s and
early 1970s. They became known as "one-decision" stocks because investors were
told by individuals such as University of Pennsylvania professor Jeremy Siegel
that they could buy and hold them forever. That wasn't always the case. Though
no one comprehensive list exists of the Nifty 50, examples of some of these stocks
included General Electric (GE), Coca-Cola (KO), and IBM (IBM). However, part
of this list included companies that have been troubled in the last decade, such as
Xerox and Polaroid

The NIFTY 50 index has shaped up to be the largest single financial product
in India, with an ecosystem consisting of exchange-traded funds (onshore and
offshore), and futures and options at NSE and SGX. NIFTY 50 is the world's most
actively traded contract. WFE, IOM and FIA surveys endorse NSE's leadership
position. Between 2008 & 2012, the NIFTY 50 index's share of NSE market fell
 from 65% to 29%[10] due to the rise of sectoral indices like NIFTY Bank, NIFTY
IT, NIFTY Pharma, and NIFTY Next 50.

NUMBER OF BASE YEAR OF CURRENT

INDEX COUNTRY TYPE
STOCKS FORMATION LEVEL

S&P 500 United States Large cap 503 1957 4,117.37

Dow Jones
United States Large cap 30 1885 32,417.59
Industrial average
NASDAQ
United States Large cap 3554 1971 12,643.01
composite index

EURO STOXX Europe Mega cap 50 1998 4,014.36

United
FTSE 100 Large cap 100 1984 7,291.28
Kingdom
Deutsche Boerse
AG German Stock Germany Large cap 40 1988 14,879.94
Index

Nikkei 225 Japan Mid cap 225 1950 30,991.69

Tokyo Stock
Exchange Tokyo Japan Mid cap 1669 1969 2,224.25
Price Index
Hong Kong Hang
Hong Kong Large cap 73 1969 17,398.73
Seng Index

BSE SENSEX India Large cap 30 1986 63,782.80

NIFTY 50 India Large cap 50 1997 19,047.25