From Our Previous BlogPosts You Would Have Understood The Magic Of Compounding , If You Have Not Read It I Highly Recommend First To Read That Posts To Gain Basic Knowledge Of Stock Market And As We Will Go On We Will Our Knowledge Day By Day By Introducing New Topics In Easy Words. So Rather Than Wasting Time Lets Start Discussion About What Sensex And Nifty Are What Are Stock Exchanges In Stock Market and What Are Benchmark Indices In India.You Might Have Got Confused As An Beginner What These Words Mean And It Might Be Looking Complicated For You. But Wait I Am Here To Simplify These Topics With The Help Of Example Which Would Satisfy Your Doubts. For An Easy Example We Take Stock Exchanges As a Vegetable Exchange. When You Go To Vegetable Market You Would Be Seeing Various Vendors Trying To Sell Vegetable To You. They Work As a Broker As They Buys Vegetable From Central Market And Sells It To You For Which They Charges There Comission. But You Would Say How It Is Related To The Stock Market ? But It Is Related With It Because Here The Vegetable Market Is The Place Where Vegetables Are Listed And It Is The Place Where The Transaction Of Vegetable Happens For Some Money Similarly In Stock Exchanges The Transaction Of Shares Of Company Happens For Some Amount Of Money And It is Also The Place Where Companies Are Listed In Stock Market Through Which We Can Buy Shares Of Company Which Are Listed In it. There Are Mainly Two Stock Exchanges In India Where These Transactions Happens. They Are- National Stock Exchange And Bombay Stock Exchange. In Old Times You Would Have To Buy Physical Shares By Going These Places Located In Mumbai But Now You Can Easily Buy Shares Online Sitting At Home.So Now The Last Question Is How Sensex And Nifty Are Related To It. But To Understand It We Need To Understand What Are Benchmark Indices. For Example When We Buy Vegetables They Are Put It In Basket And They Are Put Together By Their Likeness And Similarities Between Them And In Stock Market We Also Catagorize And Put Together Similar Companies Together On The Basic of In Which Sector They Works And How Big Their Market Capitalization Is. This Might Be New Word For You Which I Would Be Explaining In Further Posts. So On The Basis Of These Things Companies Are Grouped In A Basket To Understand All The Companies Together How They Are Performing And This is What Benchmark Indices Mean. They Are Mainly Two Indices Sensex Is The Group Of Top 30 Companies Listed In Bombay Stock Exchange. It Helps Us To Measure How Top 30 Companies Are Performing As When Most Of These Companies Perform Good Positive Points Are Given To Sensex And If Most Of Them Are Performing Bad Negative Points Are Given To Them. Same Happens With Nifty 50 It is The Measure Of Top 50 Companies Listed On National Stock Exchange These Helps Us To Understand How Top Companies Are Performing And Give Us An Idea Of Market. But Wait You Should Not Take Investment Decisions On Only Basis Of These You Need To Understand How To Find A Good Company And How To Evaluate It This All Implies To Other Market As Well In Other Country As Well Nasdaq, Rusell 2000, S&P 500 And Dow Jones Which Are Indices Of U.S.A To Gain More Knowledge Of Stock Market Keep Reading Our BlogPosts We Will Meet Next Time
Untill Then,
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