Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations. Stock markets are components of a free-market economy because they enable democratized access to investor trading and exchange of capital. Stock markets create efficient price discovery and efficient dealing.
What Does It Do, and How Does It Work?
The Bank NIFTY is an index comprising 12 banking company stocks. These stocks are traded on the National Stock Exchange (NSE). The Bank NIFTY index contains stocks of companies from the banking sector only. As the Bank NIFTY includes only banking sector stocks, it is considered the most liquid and highly capitalised. The stocks which are listed in the Bank NIFTY belong to private and public sector banks. The Bank NIFTY was formed in 2003, and since then, investors, both retail and institutional, have been employing it as a useful benchmark for banking stock investment.
In January 2021, the National Stock Exchange (NSE) launched Nifty Financial Services Index. FINNIFTY is the symbol for Nifty Financial Services Index in the stock market. It is an index that includes the stock values of various companies that are part of the Indian financial sector. Although banks constitute well over 65% of the index, there are other major financial institutions in the list of component stocks as well. This includes insurance companies, housing finance, NBFCs and other companies that offer financial services. FINNIFTY, in a way, tracks the performance of such companies or subsectors within the economy in one single index. Therefore, if the financial sector of India is doing well in terms of finances and investor confidence, then FINNIFTY will probably gain in value and vice versa. Given this diversification, FINNIFTY is attractive as a benchmark for trading and investing.
The term Sensex refers to the benchmark index of the BSE in India. The Sensex is comprised of 30 of the largest and most actively traded stocks on the BSE and provides a gauge of India's economy. It is float-adjusted and market capitalization-weighted. The Sensex is reviewed semiannually each year in June and December. Created in 1986, the Sensex is the oldest stock index in India and is operated by Standard & Poor's (S&P). Analysts and investors use it to observe the cycles of India's economy and the development and decline of particular industries.
Things to trade in
The FINNIFTY, also referred to as the Nifty Financial Services Index, is a well-known gauge that monitors the performance of the Indian financial services sector. Comprising 20 carefully selected stocks, the index assigns weights to these stocks based on their free float market capitalization With an initial value set at 1000, the FINNIFTY serves as a vital benchmark for tracking the ups and downs of the financial services industry in India.
Nifty Bank, or Bank Nifty, is an index comprised of the most liquid and large capitalised Indian banking stocks. It provides investors with a benchmark that captures the capital market performance of Indian bank stocks. The index has 12 stocks from the banking sector. The top stocks of the index include HDFC Bank Ltd. 31.61%, ICICI Bank Ltd. 18.20%, Axis Bank Ltd. 13.02%, Kotak Mahindra Bank Ltd. 12.74% and State Bank of India 10.92%. Bank Nifty, like others, is computed using free float market capitalization method. It's index variant includes NIFTY Bank Total Returns Index or Bank NiFty TRI. The index was launched in 2003.
The NIFTY 50 is a benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange.[1][2] Nifty 50 is owned and managed by NSE Indices (previously known as India Index Services & Products Limited), which is a wholly owned subsidiary of the NSE Strategic Investment Corporation Limited.[3][4] NSE Indices had a marketing and licensing agreement with Standard & Poor's for co-branding equity indices until 2013. The Nifty 50 index was launched on 22 April 1996,[5] and is one of the many stock indices of Nifty.
A stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation. Units of stock are called "shares" which entitles the owner to a proportion of the corporation's assets and profits equal to how much stock they own. Stocks are bought and sold predominantly on stock exchanges and are the foundation of many individual investors' portfolios. Stock trades have to conform to government regulations meant to protect investors from fraudulent practices.
A mutual fund is a financial vehicle that pools assets from shareholders to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is usually tracked as the change in the total market cap of the fund—derived by the aggregating performance of the underlying investments.
The BSE SENSEX (also known as the S&P Bombay Stock Exchange Sensitive Index or simply SENSEX) is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange. The 30 constituent companies which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy. Published since 1 January 1986, the S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the SENSEX was taken as 100 on 1 April 1979 and its base year as 1978–79. On 25 July 2001 BSE launched DOLLEX-30, a dollar-linked version of the SENSEX.
Exchange traded funds have emerged as a very simple way to invest in gold. Gold ETFs are simply funds that invest in gold and can be bought and sold on stock exchanges, like common stock. Investors are required to purchase a minimum of one unit that is equivalent to one gram of gold to begin trading in gold ETFs. Some of the popular gold ETFs in India include Axis Gold ETF, Birla Sun Life ETF, HDFC Gold Exchange Traded Fund, UTI Gold Exchange Traded Fund, Reliance Gold Exchange Traded Fund and Invesco Gold Exchange Traded Fund among others.
Systematic Investment Plan (SIP) is an investment route offered by Mutual Funds wherein one can invest a fixed amount in a Mutual Fund scheme at regular intervals– say once a month or once a quarter, instead of making a lump-sum investment. The installment amount could be as little as INR 500 a month and is similar to a recurring deposit. It’s convenient as you can give your bank standing instructions to debit the amount every month.
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