Decoding The Most Active Global Indices : NASDAQ and DOW JONES

Stock exchange is a place where traders and stock brokers come together. They share this platform to perform exchange of financial products like bonds, funds, shares etc. legally. The exchange helps in safe and trustable transfer of securities.

The first stock exchange began in Amsterdam. It was known as ASE (Amsterdam Stock Exchange). It began in 1653. There are various stock exchanges functioning today across the world. Major stock exchanges across the world with their time zones are mentioned below :

EXCHANGE INDEX NAME	NATION	WORKING HOURS (IST)
NYSE	U.S.A	7:00 PM – 1:30 AM
NASDAQ	U.S.A	7:00 PM – 1:30 AM
DOW JONES	U.S.A	7:00 PM – 1:30 AM
S&P 500	U.S.A	7:00 PM – 1:30 AM
FTSE	LONDON	1:30 PM – 10 PM
DAX	GERMANY	12:30 PM – 2:30 AM
SSE	CHINA	7 AM – 12:30 PM
HKEX	HONG KONG	6:45 AM – 1:30 PM
KOSPI	KOREA	5:30 AM – 11:30 AM
NIKKEI	JAPAN	5:30 AM – 11:30 AM
S&P/ASX	AUSTRALIA	5:30 AM – 11:30 AM
Nifty50	INDIA	9:15 AM – 3:30 PM
Sensex	INDIA	9:15 AM – 3:30 PM

DOW JONES

It is an industrial average of the top 30 companies of the U.S. It has been operating from 1896. The average was found out by a researcher of Wall Street Journal Charles Dow. The name Dow Jones came from Charles Dow And his Statistician Jones. Both of them together comprised this index. In the initial period mostly the heavy industrial firms  were included into the index for getting a calculated value. The creation of the index was to make a note of the entire market and its related sectors. The reason why industry is associated with the Dow Jones is Heavy industries and manufacturing companies associated with the index.

The calculation of the index is done through a very simple manner. It directly considers the pricing of every stock present in the index. This pricing  is divided by a specific number selected and changed every year. The number currently is 0.152 and it changes as and when the company goes into stock splits. The reason is to keep the pricing unaffected by any such changes in a company.

The history associated with Dow Jones suggests leather manufacturing and steel manufacturing in the U.S. government companies associated with it. With the passage of time all those companies either stopped functioning or got converted or sold to major companies of today.

The shares present into the index today are selected on the basis of ten components by the committee of S&P Global. The most basic is the amount of dividend disbursed and shareholders interest into consideration by a company. This index is not much preferred in today’s time due to the increased reliance on NASDAQ. However it’s among the busiest indexes in the U.S. and is helpful in determining the market direction and effects of macroeconomic factors.

NASDAQ

It is for the NYSE (New York). It is part of the U.S. stock market only at the end. The index is the most active and most preferred index in the world. It is also a parameter to decide the world’s direction for the markets. The reason is the significance of this index.

NASDAQ is also associated with the LSE (London stock exchange). London owns the privilege for having the first stock exchange established.Hence it is the oldest exchange with large amounts of transactions and greater liquidity. NASDAQ is the first index and exchange to have an international link with another stock exchange. This has made it a global index for reference.

NASDAQ deals into different tiers. It has set up standards as well as easy norms for all classes of companies to get into it and get facility of public funding. The classes identified by NASDAQ are Capital market, Global select market and Global market.

The categories presented differentiate the business classes and their market cap. The Capital market is for the first who have a small market cap and the listing requirements for these companies is less strict than other class of companies.

Global market category is for the mid cap companies. This signifies the companies having neither more nor less exposure to the market. The regulations for qualifying as a company into this segment requires a high amount of regulation and administration work. There are more than 1440 stocks under this segment.

Global Select market is the blue chip or large cap stock holding class. It has more than 1210 companies under its purview and Nasdaq listing qualifications committee reviews every request personally and ten allows the company to be a part of this tier under NASDAQ.

NASDAQ AND DOW JONES

NASDAQ and DOW are both important indexes for their respective stock exchanges and around the world. Many times to refer to the movements of the next day’s Indian markets people refer to the DOW and NASDAQ movements, The reason is there are many companies that are Indian and present in both the markets. One also refers to those companies ADRs to know about the subsequent change in price with any new information coming into light or any major company move. Hence these indices are not only refer by their exchanges but by many indices and exchanges in the world.