Compendium admissions 2023-25
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| Indices A market index tracks the market movement by using the prices of a small number of shares chosen as a representative sample. Most leading indices are weighted by market capitalisation to take into account the fact that more the number of shares issued, greater the number of portfolios in which they maybe held. Stocks included in an index are also quite liquid, making it possible for investors to replicate the index at a low cost. The most widely tracked indices in India are the NSE’s Nifty 50, SP BSE Sensex and MSEI’s SX40. The SP Sensex has been computed as the market cap weighted index of 30 chosen stocks on the BSE. The SX40 is composed of 40 most representative stocks listed on Metropolitan Stock Exchange of India Ltd (MSEIL) and the Nifty 50 is composed of 50 most representative stocks listed on the National Stock Exchange. The shares included in these indices are chosen based on factors such as liquidity, availability of floating stock and size of market capitalization. Some of the other common indices in India are listed below • Nifty Next 50 • Nifty 100 • Nifty 500 • SP BSE 100 • SP BSE 500 • SP BSE MidCap • SP BSE SmallCap 6 Mutual Fund Units Mutual Funds (MFs) are investment vehicles that pool together the money contributed by investors, which the fund invests in a portfolio of securities that reflect the common investment objectives of the investors. Each investor’s share is represented by the units issued by the fund. The value of the units, called the Net Asset Value (NAV), changes continuously to reflect changes in the value of the portfolio held by the fund. MF schemes can be classified as open-ended or close-ended. An open-ended scheme offers the investors an option to buy units from the fund at anytime and sell the units back to the fund. These schemes do not have any fixed maturity period. The units can be bought and sold anytime at NAV linked prices. The unit capital of closed-ended funds is fixed and they sell a specific number of units. Units of closed- ended funds can be bought or sold in the Stock Market where they are mandatorily listed. Download 4.08 Mb. Share with your friends:
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