The Nikkei 225 is a stock market index, a concept that serves as the premier benchmark for Japanese equities, similar to India's Sensex or the US Dow Jones Industrial Average. It tracks the performance of 225 highly capitalized and liquid blue-chip companies listed on the Tokyo Stock Exchange (TSE) Prime Market.
The index's origin dates back to the post-World War II reconstruction era, with its calculation commencing on September 7, 1950, retroactively calculated to May 16, 1949. It was initially launched by the TSE to measure the strength of Japanese industry and corporate development. The index was taken over by the financial newspaper Nihon Keizai Shimbun (The Nikkei) in 1970, which is why it is named after the paper.
The Nikkei 225 is a price-weighted index, meaning companies with higher share prices have a greater influence on the index's movement, regardless of their total market capitalization. This mechanism is similar to the Dow Jones Industrial Average (DJIA). The index's components are reviewed and rebalanced semi-annually, typically in April and October, based on factors like liquidity and sector balance. It is calculated in real-time, with updates every five seconds.
The index is closely connected to the broader Tokyo Stock Price Index (TOPIX), which is a market-capitalization-weighted index, offering a different perspective on the Japanese market. The Nikkei 225 is widely used globally as a barometer of Japanese economic health and is often compared to other major global indices like the S&P 500 and the FTSE 100. The index has recently seen significant movement, breaking the 40,000-point level in March 2024 and hitting a record high of over 63,000 in May 2026, driven by factors like tech gains and global market sentiment.