What are stock indexes?

How are they calculated?

Indices can differ based on their method of calculation – which is based on certain specific theory of what elements will give a near perfect indicator of industry average etc.

Indices may be price-weighted (prices of the stock are considered for calculating the index), or, capitalization-weighted index which looks at market value of the stocks.

Mostly used method is market capitalization method, where

Market capitalization = market price of shares x number of shares outstanding (issued by the company)

Another method used is free float market capitalization method, where Market capitalization = market price of shares x number of share which are available for trading in the open market

How Sensex is Calculated

Famous indices and trivia:

Some very popular stock indices followed worldwide:

1. Dow Jones Industrial Average, The Global Dow

2. Dow Jones Asia Titans 50

3. S & P – Global 1000/1200 – (S&P = Standard and Poor’s)

4. S & P Asia 50

5. BBC Global 30

6. EURO STOXX 50

7. FTSE indices

8. NASDAQ indices

and, Indian stock indexes are:

1. Nifty – of NSE

2. Sensex of BSE

3. MCX-SX of MCX Stock Exchange

Famous Stock Exchanges:

(i) NYSE – New York Stock Echange – is the market leader.

(ii) NASDAQ

(iii) Tokyo Stock Exchange

(iv) LSE – London Stock Exchange

(v) Euronext 

and, Indian Stock Exchanges are:

(vi) BSE – Bombay Stock Exchange

(vii) NSE – National Stock Echange

(viii) MCX Stock Exchange

Some more indexes for g.k. purpose!

1. Iran’s – Tepix

2. Japan’s – Nikkei 225

3. China’a – SSE, SZCE, CSI 300

4. Hong Kong’s – Hang Seng Index

5. Malaysia’s – Kuala Lumpur Composite Index

6. Nepal’s – Nepal Stock Exchange – NEPSE

7. Pakistan’s – KSE indices

8. Russia’s – Moscow Inter-bank currency exchange –MISEX

9. Sri Lanka’s – All share Price Index – ASPI

10. UK – has all the FTSE indices! So easy to remember

11. USA – has got plenty, am just going to list em – the names are popular enough! -

Dow Jones, NASDAQ, Russell’s, S & P’s, Goldman Sach’s, Amex indices,

Wilshire’s and CPMKTE (capital markets equity index)!

(The numbers after the names of the indices represent the number of companies in the

index.)

and some unique indices:

12. Space Foundation Index (SFI)

13. Palidas Water Index (PWI)

14. Cleantech Index

15. Solactive Indices