Indices ( index ) is a basket of stocks that represent overall market performance. Essentially, the indices are performance indicators that indicate the performance of a certain market segment or a market as a whole. A stock market index is constructed by choosing equities that match a predefined criteria.
For example : The BSE Sensex includes 30 of country’s largest and most well capitalized stocks listed on BSE. Similarly, NSE Nifty includes the top 50 best-performing stocks.
Indices are 3 types of stocks :
Benchmark indices : Sensex, Nifty 50 etc
Sectoral Indices : BSE Bankex, CNX IT etc
Market cap Indices : Midcap Nifty , Smallcap Nifty
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