Login

Share market indices importance and key terms

The Index can be employed in a number of practical ways. It provides an invaluable resource, making it possible to quickly track down a piece of information and refer to it. 
  1. Information: 
The index reflects the wider sentiment in the market and gives us a picture of the state of the economy. An increase in the share market index suggests optimism from people about what’s to come, whereas a decrease indicates pessimism. The Nifty 50’s value on 21st November 2022 was 18150, which demonstrates a growth of 14.75% since six months ago when it was at 15820. This bullish market sentiment highlights the optimism of market participants in regard to India’s economic future. The Index at 9:30 AM on 21st November was measured at 18140, but one hour later, it shifted to 18099 – a drop of nearly 40. This amount of movement suggests that market participants are not particularly confident in the short-term outlook.
  1. Benchmarking: 
Benchmarking is a must for any trading or investment activity. Let’s assume last year, your corpus rose from Rs.100,000 to Rs.120,000, resulting in a 20% return. On the surface, it appears to be a great performance; however, if the Nifty had gone up by 30%, it would be an even better result for you. It may seem as though you haven’t done as well as you’d hoped in the market. Usually, investors aim to exceed the performance of an Index. Without it, it’s hard to measure how successful you’ve been. Comparisons to the index can be highly beneficial for assessing your success.
  1. Trading
Trading on the index is a popular way to participate in the market for many traders. This allows them to make a broader assessment of the economy or overall state of affairs and turn it into an investment decision. Often, these traders will have a short-term outlook when trading the index. Imagine this scenario: At 10:30AM the Finance Minister is about to give their budget speech. Nifty index stood at 18,150 points an hour before the announcement, and it’s anticipated that the budget will be good news for the economy. You may want to purchase the index at its current rate to show faith in your outlook. After all, this index is reflective of the nation’s wider economy. The budget is as expected, with the index reaching 18,450 – a 300 points profit! This was possible through the ‘Derivative’ segment of the markets. Although exploring derivatives is a bit early at this point, do remember that you can trade indices through it.
  1. Portfolio Hedging 
Investors typically construct portfolios of stocks consisting of 15-20, intended for long-term holding. In light of a protracted downturn, such as occurred in 2008, the portfolio could suffer losses due to the declining market and thus require hedging. We shall examine how this can be accomplished with index futures trading in an upcoming module on Futures Trading.
Marketopedia
Copy link
Twitter Facebook Linkedin
© 2021 BP Equities Pvt. Ltd.
All Rights Reserved
Get the app
Products
MentorBox
HotBox
More
e-Voting Facility

*All subscription pricing plans mentioned across the website are exclusive of 18% GST

By signing up, you agree to receive transactional messages on WhatsApp. You may also receive a call from a BP Wealth representative to help you with the account opening process

Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF

Attention Investors

  1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
  2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
  3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
  4.  Investors may please refer to the Exchange’s Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.
  5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.

Issued in the interest of Investors

Communications: When You use the Website or send emails or other data, information or communication to us, You agree and understand that You are communicating with Us through electronic records and You consent to receive communications via electronic records from Us periodically and as and when required. We may communicate with you by email or by such other mode of communication, electronic or otherwise.

Investor Alert:

  1. Prevent Unauthorised Transactions in your demat account –> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL on the same day………………….issued in the interest of investors.
  2. KYC is one time exercise while dealing in securities markets – once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  3. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor’s account.

BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), INZ000030431 (MCX/NCDEX), IN-DP-CDSL-183-2002 (CDSL),
INH000000974 (Research Analyst) CIN: U45200MH1994PTC081564
BP Comtrade Pvt Ltd – SEBI Regn No: INZ000030431 CIN: U45200MH1994PTC081564

For complaints, send email on investor@bpwealth.com

Copyrights © 2022 BP Group All Rights Reserved