PRAGMATIC CASE ANALYSIS THERAPY TO COGNIZE THE CONSTRUCTION OF STOCK MARKET INDEX AND MANAGEMENT

Abstract

The existing and operation of myriad stock market indices poses a bewildering challenge to lay investors. Some operate at international level, like S&P Global 100. There are several stock market indices functioning at national level. BSE Sensex and NIFTY 50 fall in this category. At regional level one can cite the instance of FTSE Developed Asia Pacific Index. NASDAQ-100 is an example of indices based on exchange. There are those which are sector specific, like NASDAQ Biotechnology Index, which tracks two hundred biotechnology firms. Majority of the lay investors remain oblivion to the complex technical nuances involved in the construction, maintenance and revision of stock market indices, and consequently pay a heavy pecuniary price for their ignorance. This research focuses on the construction of stock market indices with respect to market capitalization, weighted index, and index management with easy cases to help the common man comprehend the complex technical nuances involved in the construction, maintenance and revision of stock market indices with ease and clarity.

Keywords: Stock Market Indices, Market Capitalization, Weighted Index, Impact cost, Index Management