• # Day 2- Stock market series: What is index?

What is index?

In stock market Index tells us about the market direction and market behavior.

Mainly there are two Index in india.

a). Nifty50: Nifty50 mean national fifty is an index issued by National stock exchange(NSE). It represents the weighted average of top 50 companies registered on NSE from 12 different sectors and tells about the behavior of NSE. Its base value is 1000.

b). SENSEX: SENSEX means sensitive index is an index issued by Bombay Stock exchange. It represents the weighted average of top 30 companies registered on BSE. Its base value is 100.
• Sachin,
Quite interesting.
I have understood what is the index.
Kindly explain what is 'Base Value 100 and Base value 1000"

No life without Sun

• Base values are those values which are set when the index started. Like in 1996 nifty50 was started with a value of 1000 so it is its base value and today it is around 10800 which is its present value. Same in case of sensex it was started with 100 base value in 1979.

This means if you have invested Rs.1000 in 1996 in nifty50 then today value of your invested money will be Rs. 10800 and if you have invested Rs. 100 in sensex in 1979 then it will be around Rs. 36600 today.

• Sachin,
What is Face value? Is there anything like Face value? If yes. What is the difference between Face and Base value?

Or is base value the minimum sum that we can invest?

Please throw more light on this.

No life without Sun

• Face value is for shares. It is the price at which company listed its share in books. It is different from base value as base value is for index not for shares.

• Sachin,
Supposing I invest Rs. 10000/- with a company by buying some shares, say 1000 shares of Rs. 10. What would be the index base value in the stock exchanges?

I might ask something that might be stupid, but clarify my doubts with patience.

No life without Sun

• There is not relation between share price and base value.
We check index value I.e value of nifty50, sensex, etc to see the behavior of the market. If nifty50 is gaining say up by 2% then we can say stock market is gaining today. When share market goes up mostly shares show profits.

• Sachin,
Just show us some example about the increase and decrease in the index base value in a way that we can understand it better, if you can. How it is shown in the newspapers?

No life without Sun

• Base price do not change it is the present value of index which changes.

Check out the image attached of nifty50 for last 6months.

• Thank you. Waiting for your 3rd day lesson.
No life without Sun

• Tomorrow I will write about the company's capitalization and size of the company.

• Thanks Sachin for the great initiative you have started to educate us on index and today I came to know the difference between the NSE and BSE and this new information for me.
K Mohan @ Moga