Multiple types of equity indices exist. HERE YOU MAY SEE THE TWO MAIN BRANCHES:
Broad-based equity indices that cover the entirety of the market.
Industry-specific indices with a focus on a particular sector
PROPERTIES OF INDICES:
Composed for the purpose of measuring financial values such as interest rates, inflation, etc.
They can be described as evolutionary markers.
They evaluate price performance via a standardized manner.
They can be executed passively as a low-cost method for achieving the profit positions of popular indexes.
A person cannot invest directly in indices. Investors must first purchase index funds.
As price and return indices, equity indexes are computed in two distinct ways. With dividend payment, the disparity between price and return indices occurs. In price indexes, dividend payments are not accounted for. In return indices, however, it is assumed that dividends are reinvestment in the stock market.
A stock market index is a value comprised of various stocks and created by adding different weights to equity index values (into a formula). Consequently, it fluctuates based on the weight of each share in the index value.
Equity indices determine the general trend of the stock market by measuring the price movement of stocks.
Dow Jones, Nasdaq, S&P500, FTSE, and DAX are, in terms of trading volume, the five most important global equity indices.