Stock Index - Factors Affecting Share Prices


An index is a number used to represent the changes in asset of values between a base time period and another time period. A stock index is a number that helps measure the levels of the market. Returns on the index thus are supposed to represent returns on the market.

Index means the statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. Indexes measure the ups and downs of stock, bond, and some commodities markets, in terms of market prices and weighting of companies in the index. An index is a statistical measure of change in an economy or a securities market. In the case of financial markets, an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage changes is more important that the actually numeric value. For example, knowing that a stock exchange is at, say, 5,000 don’t tell you much. However, knowing that the index has risen 30% over the last year to 5,000 gives a much better demonstration of performance.
OBJECTIVES OF THE STUDY

The main objective of this project is to understand the composition and performance of two main stock indexes in India i.e., SENSEX and NIFTY.
It includes:
1.      To understand the concept of stock indices.

2.      To study the major companies those are part of the indices.

3.      To study the volatility of stock prices and indices.

4.    To study the impact of different economic, industry and company specific factors that effect the stock prices and stock market indices.

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