Equity Market Indicators – Understanding the ups & downs
Equity Market Indicators - Understanding the ups & downs
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Being a rookie never feels good. Having interest in knowing something drives every individual towards learning and being better day by day. Hearing people talking about their daily practices in the equity market while they use all those heavy and complicated words which really affects one’s morale for doing something new is no shocker.
Equity Indices
As time has passed by equity market has grown complex and for understanding the direction of equity market several indices have been constructed. Such indices contain a basket of equity shares whose price is weighted on market capitalization held by each company.
Types of Equity Indices
- 1. Narrow Bell Weathers : The name might be complicated but these simply include the indices made up of a few large listed stocks which definitely serve as an apt measure of market movement. Example : S&P Sensex tracking 30 stocks, Nifty 50 tracking 50 stocks.
- 2. Broad Indices : Unlike the former category the broad indices track a large basket of shares. Example : S&P BSE 500 or Nifty 200. With the change in market broad indices also tell us about the change in economy since it covers almost 93% of market capitalization with all 20 major industries in the economy.
- 3. Sectoral Indices : Now some people may be just interested in performance of one particular sector rather than all the categories from technology, consumable items, pharmaceutical, real estate to media because they might even know about that one sector only or they just wanted to play sector specific.
- 4. Turnover or Volume Traded : Turnover in case of indices is measuring how much activity took place on a business day in the market as a whole and in each stock. For individual stocks, turnover figures are evaluated to determine the liquidity. Higher the turnover in a stock, better is the liquidity.
- 5. Top gainers and losers/ 52 week high or low : Top performers can be derived from the data on stocks that gained the most or lost the most in percentage terms.
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6. Circuit Breakers : When too volatile movements happen in the index then the exchange authorities who monitor such drastic up or down movements put a halt on all the trading in equity and equity related derivatives markets. The market re-opens after the halt with a small session called pre-open call auction.
The time duration of such trading halts and pre-open call auction depend on the percentage amount of decline in the index as well as at what time such decline occurs. Below is the table for more details.
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@Gourav__Ahuja
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