What is the stock market index and how is it calculated?

An index is an indicator that includes more than one stock, is calculated according to the weights of the stocks and measures proportional changes. Indices are divided according to the sectors of the stocks included in them.

In Borsa (Stock Market) Istanbul, there are BIST 100, BIST 30 and BIST 50 indices. The price of the index is formed according to whether the shares in the index gain or lose value. There are also sectoral indices. BIST Bank index, BIST SME Industry index, etc.

HOW IS THE STOCK MARKET INDEX CALCULATED?

The BIST 100 index gives investors an idea about many issues from the general course of the stock market to the country's economy. So, how is the BIST 100 index calculated? Here is the calculation formula; Et = Value of the index at time t n = Number of shares (companies) included in the index Fit= Price of the "i" th share at time t Nit = Total number of "i" shares at time t Hit = The ratio of the "i"th share to the total number of shares in actual circulation used in the index calculation at time t Kit= coefficient of the "i "th share at time t Dt= The value of the exchange rate of the index at time t Bt = Divisor of the index at time t Stock indices are calculated in two different ways: price and return indices. The difference between price and return indices arises from dividend payments. Dividends paid are not taken into account in price indices. In return indices, on the other hand, it is assumed that the dividends paid are reinvested in the stock market. The BIST 100 index is calculated as a price index unless otherwise stated. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!