Market Index

Index

Basket of well-established and financially sound companies

A market index tracks the performance of a specific "basket" of stocks considered to represent a particular market or sector of any stock market or the economy all over the world. It is a tool used by investors and financial managers to describe the market. Index gives clear indications on direction of market.

Here are general descriptions of a few major market indices.

S&P 500	USA	Index of 500 stocks intended to be a representative sample of leading companies in leading industries within the U.S. economy
Dow Jones Industrial Average (DJIA)	USA	The Dow Jones Industrial Average is an index of 30 "blue chip" stocks of U.S. industrial companies.
SENSEX	INDIA	SENSEX is a stock market index based on collection of 30 well-established and financially sound companies listed on Bombay Stock Exchange
NIFTY	INDIA	India's benchmark stock market index for Indian equity market which is a collection of top 50 companies in India. This index is associated with National stock exchange.

Stock exchange

Stock exchange

             “A market in which securities are bought and sold called as a stock exchange.”

Stock exchange is a platform where investors can buy or sell stocks they are holding. Single company stock can trade on multiple exchanges, consider XYZ Company is listed on Bombay stock exchange (BSE) and National stock exchange (NSE). Stock will be available on both the exchanges. Investor can buy the stock from both the exchanges.

Companies wanted to raise capital gets listed on stock exchange. Stocks first become available on an exchange after a company conducts its initial public offering (IPO). In an IPO company sells shares to an initial set of public shareholding (primary market). After that IPO “Floats” shares into the hands of public shareholdings, these shares can be sold and purchased on an exchange (Secondary Market). Listing date is the first day of trading for listing company. Concept is same with exchanges all over world.

Example.

Consider a stock of Larsen & Toubro Ltd is trading at 1372.55 Rs. Buyer wants to buy stock at 1372.55 Rs and seller wants to sell at 1373.00 Rs