Index is a measurement of the value of a section of the stock market.
It is computed from the prices of selected stocks.
It’s a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.
An index represents the performance of the stock market of a given nation, and by proxy, reflects investor sentiment on the state of its economy.
The most regularly quoted market indices are national indices composed of the stocks of large companies listed on a nation’s largest Stock Exchange such as the American S&P 500, the Japanese Nikkei 225 and the British FTSE 100.