FTSE 100

The UK's headline index

The FTSE 100 answers a basic question about Britain's stock market: how is it doing overall? It tracks the 100 largest companies listed on the London Stock Exchange, weighted by market capitalisation, so the biggest firms move the index the most. Pronounced footsie, it is the most-watched gauge of UK and broader European equity sentiment.

The index is heavily concentrated. A handful of giants such as AstraZeneca, Shell, HSBC and Unilever together account for a large share of its value, which means the FTSE 100 can rise or fall on the fortunes of just a few names.

What it actually reflects

A quirk worth knowing is that the FTSE 100 is not really a bet on the UK economy. Many of its constituents are multinationals, energy, mining, banking, pharma and consumer-goods groups, that earn a large portion of revenue overseas. So the index often moves with global commodity prices and the pound rather than with British high-street activity.

Its sector mix tilts toward financials and consumer staples, with relatively little technology weight compared with US indices like the Nasdaq. That gives the FTSE 100 a more value and income flavour, with historically generous dividends, but less of the high-growth tech exposure that has driven American markets.

Why it matters to Indian investors

For an Indian investor, the FTSE 100 is mainly relevant in two ways. First, it is a benchmark for international diversification: global or UK-focused mutual funds and ETFs accessible from India may track or reference it.

Second, it is a sentiment signal. Because London opens before US markets and hosts globally exposed firms, FTSE moves offer an early read on risk appetite that can ripple into the NSE and BSE the same day. Remember that any overseas investment also carries rupee-pound currency risk on top of the underlying market risk.