Stock Index

What does the stock Index indicate?

First, let’s look at what an index number represents. Although there are different ways to calculate index numbers, it is important to remember the numbers represent a change from an original or base value.

The number is not important. What is important is the percent change over time. This movement up or down gives you and idea of how the index is performing. Is the Dow up or down? The index is calculated “on the fly” during trading to give investors a sense of direction to the market it represents

The sensex's calculation involves dividing the total market capitalisation of 30 companies in the index by the index divisor — the only link to the original base period value of the sensex.

These 30 companies are taken as the representative of the Market. There may be more than 30 companies registered in the exchange.