The market index generally refers to the Shanghai Composite Index and Shenzhen Component Index. It can scientifically reflect the whole stock market, such as the overall rise and fall of stocks or the trend of stock prices. If the market index rises gradually, you can judge that most stocks are rising. On the contrary, if the index is gradually falling, then most stocks are falling.
When calculating the stock index, the stock index and the average stock price are calculated separately. By definition, the stock index is the average share price. However, from the actual role of the stock market, the average stock price is an overall level reflecting various stock price changes, which is usually expressed by arithmetic average. By comparing the average stock prices in different periods, people can realize the changing levels of various stock prices. Stock index is a relative index that reflects the changes of stock prices in different periods, that is, the percentage of the average stock price in the first period is used as the benchmark of the average stock price in another period.
Through the stock index, people can know the percentage of stock price rising or falling in the calculation period compared with the base period. As the stock index is a relative index, the stock index can measure the change of stock price more accurately than the average stock price.