{"id":1989,"date":"2020-10-22T16:12:42","date_gmt":"2020-10-22T10:42:42","guid":{"rendered":"https:\/\/blog.tickertape.in\/?p=1989"},"modified":"2021-12-14T18:12:51","modified_gmt":"2021-12-14T12:42:51","slug":"market-indices-help-understand-investment-patterns","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/market-indices-help-understand-investment-patterns\/","title":{"rendered":"How market indices can help you understand investment patterns \ufeff"},"content":{"rendered":"\n<p>Folks, we are excited to start our \u201cTickertape Feature Series\u201d, where we\u2019ll pick the most-loved features of <a href=\"https:\/\/www.tickertape.in\/?ref=blog\">Tickertape<\/a> and talk about how they can aid your stock-picking and decision-making process. So, whether you have tried your hands on \u2018Tickertape\u2019 as yet or not, our Feature articles are sure to give you reasons to make the most of the platform in your investment process \ud83d\ude42<\/p>\n\n\n\n<p>First in the series is Tickertape\u2019s <a href=\"https:\/\/www.tickertape.in\/blog\/stock-market-index\/\">Index<\/a> Pages. This article will throw light on how indices impact investment patterns and how Tickertape\u2019s Index Pages can empower your stock investment.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/market-indices-help-understand-investment-patterns\/#Overview-stock-indices\" title=\"Overview: stock indices\">Overview: stock indices<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/market-indices-help-understand-investment-patterns\/#How-indices-reveal-investment-patterns\" title=\"How indices reveal investment patterns?\">How indices reveal investment patterns?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/market-indices-help-understand-investment-patterns\/#The-highlights-of-Tickertapes-index-pages\" title=\"The highlights of Tickertape\u2019s index pages\">The highlights of Tickertape\u2019s index pages<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/market-indices-help-understand-investment-patterns\/#Overview\" title=\"Overview\">Overview<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/market-indices-help-understand-investment-patterns\/#Constituents\" title=\"Constituents\">Constituents<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/market-indices-help-understand-investment-patterns\/#News-and-Corporate-Actions\" title=\"News and Corporate Actions\">News and Corporate Actions<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview-stock-indices\"><\/span><strong>Overview: stock indices<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Stock indices are excellent tools to measure the performance of the overall market, sector or stock. It thus allows you to compare how your favourite stock has performed as against the overall market\/specific sector. <a href=\"https:\/\/learn.tickertape.in\/modules\/investing-in-stocks\/index-indices\/?ref=blog\" rel=\"nofollow noopener\" target=\"_blank\">Read more on indices here<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How-indices-reveal-investment-patterns\"><\/span><strong>How indices reveal investment patterns?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Apart from indicating the market performance, a benchmark index also offers other valuable insights that you can apply in your investment process<\/p>\n\n\n\n<p><strong>1. Sector and stock comparison:<\/strong> Sector-specific indices allow comparison of the performance of a stock against the entire sector. For instance, Nifty Bank Index not only measures the performance of the banking sector, but also allows comparison of each constituent stock with the index. So, if <a href=\"https:\/\/www.tickertape.in\/stocks\/state-bank-of-india-SBI?ref=blog\">SBI<\/a> has generated returns higher than that of Nifty Bank, it means that the stock has outperformed the index.<\/p>\n\n\n\n<p><strong>2. <a href=\"https:\/\/www.tickertape.in\/blog\/compare-fundamental-stocks-from-same-sector\/\">Peer comparison<\/a>:<\/strong> Each sector has numerous listed-companies, which makes evaluating stocks individually an impractical process. But since an index represents various underlying stocks, its metrics can be used as a standard to compare those of your favourite stocks.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh6.googleusercontent.com\/YWGBkg2gVktBod_3mpcTyxVXZXd9R_0z3YUxvpufCiy4OemLK5qnYT0IGhP1Z3KDuZoCIw4xf7RnxVDAtVaTjm107UUWzYoYk7R4h54o4dnVFHCJszp41V0a0ZGFCgheF1s5CiTp\" alt=\"\"\/><\/figure>\n\n\n\n<p>In the above image, you can see that SBI has outperformed the Nifty Bank Index from Oct 2019 to Apr 2020 while HDFC Bank Ltd underperformed. However, the trend reversed starting from May 2020.<\/p>\n\n\n\n<p><strong>3. Measure the performance of ETFs:<\/strong> Indices are also used to benchmark ETFs and are supposed to closely mimic the performance of the index.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>Tickertape\u2019s Index Page shows all the ETFs tracking the particular index. Following is an image that displays all the ETFs benchmarked against <a href=\"https:\/\/www.tickertape.in\/indices\/nifty-100-index-NIFTY100\/etfs?ref=blog\">Nifty100<\/a>.<\/p><\/blockquote>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/TszjjTI7CvaOjrLy-IXDTTRSMwIDmFiV2Yhzw_H6EO8Rw2OpYrEdmXdPgMmG2_yt2fU90qmvI8SQ11AUjuCI7F49QUX68dvsdvXx_i1wHH07TvY2v3l29e4Dfm6d9cTIYBdZlYI_\" alt=\"\"\/><\/figure>\n\n\n\n<p><strong>4. Reflection of investor sentiment:<\/strong> When investors are wary of a particular stock\/sector, they avoid betting on it, which dampens its demand. Naturally, the price of the stock also tumbles. Conversely, if investors are positive about a stock, its demand and price rise and thus push the index higher. So, by examining a sector-specific benchmark index, you can identify the investor sentiment towards that industry. Next, you can evaluate the stock-specific trends. Tickertape\u2019s Index Page has a \u2018Constituents\u2019 tab, which can help you here. More on this later.<\/p>\n\n\n\n<p><strong>5. Passive investment: <\/strong>Sometimes you may replicate your portfolio to match the constituent stocks of a benchmark index and the weights assigned to them. For the uninitiated, this is called passive investment and such as a portfolio generates returns similar to the index. For instance, if your portfolio replicates Nifty50 whose returns have been 10% in the last 12 months, then your investments would also generate similar returns.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The-highlights-of-Tickertapes-index-pages\"><\/span><strong>The highlights of Tickertape\u2019s index pages<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Tickertape&#8217;s Index Pages is clean, neat and more importantly, a trove of useful information about the index. Following are the highlights of Tickertape\u2019s Index Pages and how they can power your investments.<\/p>\n\n\n\n<p>Let us first launch the Nifty Bank Index Page for our example. Go to<a href=\"http:\/\/www.tickertape.in\"> www.tickertape.in<\/a> and look for your Nifty Bank Index in the search box. As you can see, the index page has various tabs, as follows.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview\"><\/span><strong>Overview<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The \u2018Overview\u2019 tab of the index page:<\/p>\n\n\n\n<ul><li>Displays a price chart for various periods<\/li><li>Suggests how risky the index is and<\/li><li>Offers sectoral details<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/kActIHyFUv4B5JJTXObp2XiPSvVrRNk_WXAL9hXSLHk4F6wr42Jiy-QB8V-93rhMFkFm_w-uzp7iEjHcn5Mjls4SNHmNq_quZlpvHKyz3bSsuoP7yTAANdHO_etOEdfpSoL0kIeo\" alt=\"\" width=\"556\" height=\"277\"\/><figcaption>The price chart on the overview page of Tickertape&#8217;s Index Page<\/figcaption><\/figure>\n\n\n\n<p>Further down, the index page also displays key metrics such as PE ratio, ETFs benchmarked against the index, and its constituents too. This helps you compare the returns of an asset class with that of the index.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/Tk65bDwB0Q6UocUDmwc3okkokaV0m0U8caI8RrUw8kNAkNUVWqPiQA7mBZWV5J9QeBhImnvmNKx1bDnWTmAeJDpY7zsiS3QrmJ9pg76d_ElbR5SC1_MYGCGndxd-fH9ezZ04F_i3\" alt=\"\"\/><figcaption>Key metrics of an index on the overview page of Tickertape&#8217;s Index Pages<\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Constituents\"><\/span><strong>Constituents<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>What stands out in Tickertape\u2019s Index Page is its \u2018Constituents\u2019 tab, which shows all the stocks included in building the index. You can sort the stocks in the index in two ways:<\/p>\n\n\n\n<ol><li>By market cap<\/li><li>By sector<\/li><\/ol>\n\n\n\n<p>In the first case, you can see basic details such as:<\/p>\n\n\n\n<ul><li>The constituent stocks of the index<\/li><li>Their 1D % change<\/li><li>The weightage assigned to them and<\/li><li>Their free <a href=\"https:\/\/www.tickertape.in\/blog\/what-explains-ruchi-soyas-rally\/\">float<\/a> market cap<\/li><\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>You can also find insights on the extent of influence each stock has had on the change in the index value. To learn this, look at the <strong>\u2018Return attribution\u2019<\/strong> column for each stock.<\/p><\/blockquote>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/B_9_YlKExndSOIAZS8oXUKT1sjF4WxZeNaif5Itdv0_D_NpNVA8LWe7vnTQD5E-YzuWcjfcgRP2o4RgKO9P6TavFVEhAhZ1tEayherH_SswHEjCVLZJvUmnWn-1nM25dC9RpmjTj\" alt=\"\"\/><figcaption>Some of the constituents of Nifty Bank Index<\/figcaption><\/figure>\n\n\n\n<p>In the image above, you can see that the Nifty<a href=\"https:\/\/www.tickertape.in\/indices\/nifty-bank-index-NSEBANK\/constituents?type=sector?ref=blog\"> Bank<\/a> has risen 0.32% in a day. When you study the constituents and the \u2018Return attribution\u2019 column together, you can see that <a href=\"https:\/\/www.tickertape.in\/stocks\/hdfc-bank-HDBK?ref=blog\">HDFC Bank<\/a> has contributed the most in Nifty Bank\u2019s gain while <a href=\"https:\/\/www.tickertape.in\/stocks\/icici-bank-ICBK?ref=blog\">ICICI Bank Ltd<\/a> has been the top laggard.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>The second option to sort constituents based on the sector gives you deeper insights into the <strong>return attribution of both the underlying sector and stocks<\/strong> of the index. Here\u2019s a snapshot illustrating the same.<\/p><\/blockquote>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/FpMP0W8NZ21oTKUehFt9lD9r2xnEARHDUihy-f5qSDxg2x8ZaGL662PxirX8t2fI_aZWVsWFkeRCoikn0TqADcKHdC9lJ7BGx8atq-0E2uy2g6y0g1uuAC9YaitD5dsWLrq7RsZL\" alt=\"\"\/><figcaption>Sector- and stock-wise constituents of Nifty50<\/figcaption><\/figure>\n\n\n\n<p>When studying <a href=\"https:\/\/www.tickertape.in\/indices\/nifty-index-NSEI\/constituents?type=sector?ref=blog\">Nifty50<\/a>, the return attribution column shows the % change caused by each constituent sector and stocks in the Nifty 50\u2019s value. While IT has contributed 0.29% change in the index, the Energy sector has dragged the index by 0.10%. Isn\u2019t that a cool feature to analyse stocks benchmarked against an index? What\u2019s more, Tickertape also lets you download this information for your reference.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"News-and-Corporate-Actions\"><\/span><strong>News and Corporate Actions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>These tabs offer information on:<\/p>\n\n\n\n<ul><li>Latest news and <a href=\"https:\/\/www.tickertape.in\/blog\/corporate-actions\/\">corporate actions<\/a> (such as <a href=\"https:\/\/www.tickertape.in\/blog\/cash-dividend-vs-stock-dividend\/\">dividend<\/a> declared) taken by individual stocks of the index<\/li><li>ETFs that are benchmarked against the index<\/li><\/ul>\n\n\n\n<p>There, you have it all! Use Tickertape to experience the simplicity and power of making informed investment decisions! Let us know how you like the feature.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Use Tickertape&#8217;s Index Pages to gain useful on insights on an index&#8217;s key metrics, its constituents, and the return attribution of each of them<\/p>\n","protected":false},"author":27,"featured_media":1993,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[143,1724],"tags":[142,141,1078,144],"acf":[],"modified_by":"Aradhana Gotur","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2020\/10\/Stock-indices.jpg?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1989"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=1989"}],"version-history":[{"count":3,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1989\/revisions"}],"predecessor-version":[{"id":2006,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1989\/revisions\/2006"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/1993"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=1989"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=1989"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=1989"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}