What is a Stock Market Index?

When people speak about market going up and down, referring to a performance that is strong or weak or turning bull or bear, this indicates the market as it’s seen through lens of indexes.

The various indexes of the different segments of the market do not move in parallel hence multiple indexes develop.

A stock market index is a measurement of the value of a section of the stock market and is calculated from the prices of selected shares. It is a tool used by investors to describe the market and to compare the return on specific investments. For example, KSE-100 index is a measurement of the value of 100 selected stocks listed on the Karachi Stock Exchange.