Stock Market Quotation and Indices

Information on stock market activity is reported in various media. It is covered by newspapers, business periodicals, other publications, radio, and even television. For most of the investors the coverage in The Economic Times or The Financial Express is reasonably adequate. For investors seeking greater details, the most comprehensive source of information is perhaps the Daily Official Quotation List of the BSE.

Investors are interested in knowing what is happening to individual stocks and what is happening to the market as a whole. Let us see how the information about these aspects is reported.

Individuals Stock Quotations:

The manner in which daily newspaper provide information on stock prices may be illustrated with the help of the following quotations for Bajaj Auto for September, 2004 as given in The Economics Times. Note that it is a combined share quotation of the BSE and NSE. The BSE quotes are given first and the NSE quotes follow in italics.

Co., (Prev Cl) Open, High, Low, close
[Vol., Val. Rs ‘000s’ Trades] P / E M Cap 52–Wk H / L

Baja Auto (932.65), 937,948, 12.7 (9438.6) 1200 / 692

(932.80), 940, 949, 931, 933.20
[1386.30, 1302916.84, 4404] 12.7 (9438.6) 1200 / 692

The first column provides information on prices, volume, value and trade. The number in the brackets to the right of the company’s name, which in the case of Bajaj Auto is Rs 932.65 represents the previous closing quotation. The set of four un-bracketed prices after this represent the opening price, the highest price, the lowest price, and the closing price. For Bajaj Auto these are Rs 937, Rs 948, Rs 931 and Rs 932.85 respectively. After the stock price quotations there is a square bracket containing three numbers. The first number, 46436 or Bajaj Auto, reflects the volume of shares traded; their second number, 43591.29 for Bajaj Auto, the value (Rs in‘000) of shares traded; the third number, 1384 for Bajaj Auto, the number of trades.

The second column reflects the diluted P / E i.e. the ratio the share’s market price to the fully diluted earnings per share. For Bajaj Auto it is 12.7. The third column represents the market capitalism (Rs in crores) of the company, which for Bajaj Auto is Rs 9438.6 crore. Finally, the fourth column shows the highest and lowest prices during the immediately preceding 52 weeks, after adjusting for bonus and rights issues of equity shares, which for Bajaj Auto are Rs 1200 and Rs 692.

The important abbreviations used in stock exchange quotations are as follows:

Con – convertible
Xd – ex (excluding) dividend
Cd – cum (with) dividend
Xr – ex (excluding) right
Sl = small lot

Stock Market Indices:

Investors often ask the question: How is the market doing? This interest in the broad market movement stems from h general observations that prices of most of the stocks tend to move together, a fact that has a fairly strong empirical underpinning. The general movement of the market is typically measured by indices representing the entire market or important segments thereof. Most of the stock market indices used in practice are of three types.

Price weighted Index: An index reflecting the sum of the prices of the sample shares in a certain year (or month or week or day) with reference to a base year. The price weighted index assumes that the investor buys one share of each stock included in the index.

Equal weighted Index: an index reflecting the simple arithmetic average of the price relatives of the sample shares in a certain year (or month or week or day) with reference to a base year. An equal weighted index assumes that the investor invests and equal amount of money in each stock included in the index.