Life With Nifty

Applications Of Market Indexes

Of what use is a market index? In India, so far, the major application of the market index has been to examine the levelof the index and know how the overall market has been faring. For a market index to excel at this application, it has to be highly informative. Later in this article, we will flesh out the idea of highly informative further.

But in the modern world, there is much more riding on a market index than just looking at the number. Market indexes are routinely used as a benchmark against which portfolio managers are judged. The poor performance of fund managers worldwide has generated a retreat from active management into index funds