BSE NSE Stocks Live Indices, Stock Market Index Analysis
BSE NSE stocks live indices are an important barometer of the equity market. The
most intuitive method of starting off on stock market index analysis is to delve
into the broad market indices and then into specific sectoral and thematic indices.
Why are indices important? They give a good approximation of the theme. If you want
to understand how the Indian markets overall are doing then you look at the Nifty
or the Sensex. If you want to understand how mid-caps as an asset class are performing
then you will focus on mid-cap indices. There are also indices that are focused
on themes and sectors which give a good approximation of how the theme has performed.
It gives us a quick idea of how specific stories have performed in the market.
Live Indices page on LKP Securities…
The live indices page on LKP Securities gives in-depth coverage of a wide cross-section
of indices. An index is typically with reference to a base year and the current
value shows the value created with reference to the base year. Since all index values
are with reference to a base year, one can use the indices to capture the point-to-point
returns as well as historic returns. Why are these indices important from an analytical
perspective? There are 3 key reasons for the same.
- Firstly, indices are good approximations and give a quick view of
which particular themes have done well. Once you see performance in a specific index
like mid-cap index or IT index or Banking, one can delve deeper into the components
of the index to look for trading and investment opportunities.
- Indices are benchmarks and can be useful for comparing performance.
How do you judge the performance of a diversified mutual fund? You can benchmark
it against the Nifty or the Sensex performance for the same period. If you are looking
at a Banking sector fund or IT fund then you can benchmark the fund portfolio to
that particular index.
- Indices give us good relative picture of the market. The relative
picture helps us to identify potential outperformers and underperformers in terms
of specific stories and themes. For traders, such relative performance can also
be very useful to create long/short trading strategies where you bet on outperformance
rather than on absolute movements.
What you must read and must not read from the Indices…
It is accepted that indices are good benchmarks. That is more so if the indices
are live indices during trading hours. However, one cannot take index performance
as an indicator of future strategy. Remember, in the stock markets the past is rarely
a good guide of the future and hence you need to take the cues from the past as
a guide and not as an indicator of future performance. Secondly, indices are subject
to change and are subject to the law of higher weightage. That means; higher weight
stocks will have an inordinately large impact on the index performance. That is
also something you need to adjust for when you use indices as benchmarks. The live
indices page is a comprehensive coverage of key themes and sectors.