Stock Index & Factors Affecting Share Prices


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. 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: to understand the concept of stock indices; To study the major companies those are part of the indices; to study the volatility of stock prices and indices and to study the impact of different economic, industry and company specific factors that effect the stock prices and stock market indices.

30 companies from different sectors have been selected to study the market and to construct the SENSEX. The market share is taken as base for the selection of index construction i.e. companies have been selected on the basis of this market share. The process of constructing an index is tedious but very useful for a normal investor who works on his own in his investment game. The process of constructing market leader index in this present project work is given clearly and any investor can follow this process to easily construct his own index. 

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