Global Indices

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Index Name	Last	Change (%)	High	Low	Open	Prev. Close
US MARKETS
NASDAQ Composite 26 Jul, 21:24	17,349.75	168.46 (0.98%)	17,366.21	17,241.21	17,321.51	17,181.72
Dow Jones Industrial Average 26 Jul, 21:23	40,622.95	698.99 (1.75%)	40,634.06	40,140.86	40,140.86	39,935.07
S&P 500 26 Jul, 20:59	5,452.35	49.61 (0.92%)	5,462.96	5,430.70	5,433.67	5,399.22
EUROPEAN MARKETS
CAC 40 26 Jul, 21:04	7,518.46	91.68 (1.23%)	7,526.27	7,427.47	7,444.41	7,427.02
FTSE 100 26 Jul, 20:59	8,290.83	104.91 (1.28%)	8,294.00	8,200.35	8,200.35	8,186.40
DAX PERFORMANCE-INDEX 26 Jul, 21:08	18,423.33	124.92 (0.68%)	18,428.88	18,218.54	18,255.35	18,298.72

Global Indices

A market index, within the context of stock markets, serves as a barometer that reflects the performance of a select group of top-performing stocks, simulating a hypothetical portfolio. World indices empower investors by facilitating market comparisons, aiding them in determining potential investment opportunities in various stock markets.

Global indices, a subset of market indices, specifically aid in evaluating and comparing market performances across diverse regions worldwide. For instance, the SENSEX stands as a testament to the stock market performance in India.

Understanding global indices

Global indices monitor equity performance in share markets spanning various regions. The MSCI World Index captures the performance of mid-cap and large equities across 23 developed nations, covering approximately 85% of free adjusted market capitalisation. Other notable global stock market indices include the Nifty, CAC, DAX, FTSE, and Sensex.

In essence, these indices serve as a lens to assess the vitality and vulnerabilities of the global markets. They derive their values from a sample of highly liquid and valuable stocks from listed entities. As these sample stocks fluctuate, they influence the trajectory of global indices.

When global indices trend upwards, it's generally indicative of a buoyant world stock market, and a downward trend often points to prevailing global market vulnerabilities.

Role of global indices

Performance indicator: Live Global Indices offer a glimpse into a notional portfolio of global market investments, providing investors insights into the holistic performance of market stocks.
Market health barometer: They offer a snapshot of a segment of the global financial market, reflecting its vitality and financial stability. This assists investors in gauging market health and informing their investment decisions.
Benchmarking tool: Various countries often reference global indices when shaping their own, positioning global indices as exemplary models.
Investment proxy: Index ETFs or funds, encapsulated as stocks, bonds, or market commodities, can represent a passive investment portfolio.

Global indices calculation methodology

The computation of global indices stems from methodologies ratified by the index committees of respective world share markets. Predominantly, the calculations commence with price-weighted indices and transition towards market cap weighting. Such an approach ensures that fluctuations in smaller stocks don't disproportionately impact the index. While multiple methodologies can be deployed, market cap weighting and free float weighting are most prevalent.

Global indices and their impact on the indian stock market

The Indian stock market is swayed by a myriad of factors encompassing both macro and microeconomic variables. The integration of the Indian market with global share markets post-globalization has heightened its sensitivity to global market movements. Such connectivity implies that actions taken by foreign portfolio investors based on global indices can significantly influence the Indian market.

For instance, significant downturns in indices like the NASDAQ can trigger ripple effects across global markets, impacting foreign capital inflows into India and, consequently, the Indian currency and index. Sectors like IT in India, with substantial reliance on US investments, exemplify the interdependence between global markets and Indian indices.

Benefits of investing in global indices

Portfolio diversification: Investing in global indices offers diversification and a broader understanding of the international stock market. A diversified portfolio can offer stability in turbulent market conditions.
Expanding investment horizons: Global indices expose investors to opportunities not present domestically, allowing them to explore sectors like technology, commodities, and engineering. Monitoring live global indices can guide investors in aligning their investments with their preferences.
Risk mitigation: Investing in major world indices can provide a buffer against potential market liquidations or frauds.
Currency appreciation: Global investments can yield the dual benefits of currency appreciation alongside access to more varied and potentially lucrative markets.

Is there a universal stock index?

Major global stock indexes represent the broader international market, including the FTSE All-World Index, Dow Jones Global Titans 50, S&P Global 100, and the S&P Global 1200 index.

Which indices tend to be the most profitable?

Some of the leading and potentially profitable global indices encompass the Dow Jones Industrial Average, Nikkei 225, FTSE 100, S&P 500, and the DAX30. However, profitability can vary based on factors such as economic and political dynamics, currency fluctuations, and other global considerations.

How can one monitor global markets?

Monitoring global markets is facilitated through the movements and trends of global indices. These indices offer a comparative analysis of markets and individual stocks in real-time, assisting investors in making informed decisions.

What defines global indices?

Global indices are investment portfolios aligned with specific sectors or regions of the global financial market. The value of these indices is determined by the prices of their underlying assets, which could be stocks, bonds, or commodities, among others. These indices can be categorised based on parameters like market capitalization, revenue, float, and fundamental weighting, with most prominent global indices adopting market cap and free float weighting.

Can you explain the key stock market indices?

To comprehend a stock market index, it's essential first to understand a stock exchange, which enlists tradable assets, including shares, bonds, and derivatives. The Securities and Exchange Board of India (SEBI) oversees stock-related activities in India. For securities to be traded, they must be listed on recognized stock exchanges.

How many recognized global indices exist?

In total, there are 26 recognized global indices, of which four are considered major world indices.

Which index serves as the best analytical tool?

The Moving Average (MA) and the Moving Average Convergence Divergence (MACD) are often regarded as top analytical tools or indicators in the financial world.

Is it possible for me to invest in the global market?

Absolutely. By setting up an overseas trading account with a reputable broker, one can actively invest in the global market.

What are some types of stock market index?

Various indices are structured based on the nature of stocks incorporated within them. Here are some prominent ones:

Benchmark indices: Such as the BSE Sensex and the NSE Nifty.
Broader indices: Examples include the Nifty 50 and BSE 100.
Market capitalization-based indices: Like BSE Midcap and BSE Smallcap.
Industry-specific indices: Including Nifty FMCG, Nifty Bank, CNX IT, and S&P BSE Oil and Gas.