How to Calculate Nifty??

Stock market is a growing trading platform where most of the investors are interested to trade. Nifty is used as an index in National Stock exchange of India, now the query arises how to calculate nifty?? Let us have a look how it is calculated. Nifty index is introduced by National Stock Exchange. Nifty is composed of two words “National” & “Fifty” fifty defines 50 national stocks include from various sectors. India is considered to be largest single financial products comprising of offshore & onshore exchange traded funds.

CNX nifty which is used as an index was founded in 1995, owned & managed by Indian index Services & Products (ISL). The CNX nifty also called nifty 50. CNX nifty is a large type cap.

Nifty is calculated as 

1) Base year is 1995 & 1000 as its base value
2) Traded in 50 stocks included from various 24 sectors

Formula of Nifty 

Nifty = (Sum of free flow market cap of 50 stocks)*index value in 1995/Market cap. Value in 1995

Nifty index is an indicator to calculate the value of measuring the existence of company stock price. While trading it can be heard that sensex has increase by 100 points or Nifty has gone up by 50 points what does it mean?? it describes that an average of 30 shares in BSE & 50 shares in NSE have performed well.
As Sensex & nifty both use as an index to measure the strength of stock market exchanges but with quite differences:

1) Nifty is the index of National Stock exchange whereas Sensex is the index of Bombay stock exchange.
2) NSE uses the base of 50 major shares which represent 24 different shares on the other side BSE      represents 330 major shares of different sectors.
3) Nifty is the indicator of major share in NSE & sensex is the indicator of shares in BSE
4) NSE is located in New Delhi whereas BSE is located in Mumbai.

There are many other indexes are used to gauge the performance of various stocks such as BSE IT & BSE Bankex.

So in this way nifty is calculated to measure the stock price. You can contact us to get more detail or visit us on: http://www.capitalstroke.com/bullion-tips.php Contact here: 9770670009, 0731-3299704

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Risks Involved In Stock Market

Investment in the stock market involves risks. The possibility of facing a loss for an investor affects the financial market performance. Market risk also called “Systematic risk “.The risk which declines the market profitable situation in to a disaster one. Market risk occurs due to recessions, political turmoil, changes in interest rates and terrorist attacks.

                           

                                               
Risk may be of two types 

1. Systematic Risk - Systematic risk occur due to external factors of an organization. This risk is uncontrollable.

2. Unsystematic Risk - Unsystematic risk occur due to internal factors of an organization. This risk is micro in nature.

Top risks involved in stock market

1. Economic Risk - These are also know as external risk .This may occur due to fluctuation in market such as changes in demand for the product, price fluctuation, changes in income.

2. Market Risk - Market risk also be called as un-diversifying risk. This risk occurs when there is fluctuations occur in trading price of any particular shares & securities.

3. Liquidity Risk - Liquidity risk is a type of risk where investment is quickly converted in to cash without bearing any loss. These risks occur when the sales and purchase of securities get affected by business cycles.

4. Financial or credit Risk - This risk occur due to change in changes in the capital structure of an organization. There are various types of financial risk such as exchange rate risk, credit event risk, sovereign risk and settlement risk.

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10 terms related to stock market

       

       Important terms used in trading:

1.       Index - Index is most commonly used benchmark for traders.

2.       Initial public offering (IPO) - The first offering of a stock by a company to the traders.IPO is used in order to make more profit.

3.       Dividend - It’s a portion of company earning which is distributed to a class of its shareholder, decided by board of directories.

4.       Hedge - To reduce the risk in price movements for an asset hedge is used. It hold an position for an stock and sold it for future contracts.

5.       Yield - Yield is the measure of return on an investment this is calculated by  annual dividend amount to the price paid for the stock

6.       Margin - To purchase an investment in share market, a person borrow money from brokers. The difference between the loan amount and securities price is termed as margin.

7.       Day trading  - In general terms  day trading is the purchasing and selling of different financial things like future, option, stocks and currencies with the aim of gaining a profit.

8.       Bear market - A long term decline market, the country’s economy recession time is termed as bear market.

9.       Bull market - A financial market where the price rising is expected to rise. This word is often term as bull market.

10.   Over the counter market (OTC) – A decentralized market where there is no geographical limitation, trading is done through computers and telephone.

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General Introduction of Trading in Commodities

Trading can be define as  purchasing or selling of exchange commodities between two parties.Generally it’s a buying and selling of goods and services in order to make quick profit in less time or in other words trading can be a businesss. Participation involve  in trading market may  range from small investor to big investor, involves some participation such as retail investor, institutional investor such as mutal funds, banks, Insurance company etc.Trading can be done in various  exchange commodites such as stock market, equity market, bullion market .

Exchanges in share market can be done by physical location which is termed as open outcry. In this process traders bids verbally and offers simultaneously, example of such an exhange is New York stock Exchange. Another type of exchange is virtual type in which trading is done  electronically with the help of an network connection example of such exchange is Nasdaq.

Most of the traders trade by auction market in which an buyers bid for a stock and a sellers ask for a stock at specific price.Trading in share market may varies with some profit and lose.In fact stock market shows the country’s strength and economic growth. In this way financial system promotes once country’s increase prosperty.

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