Question

what is the importance of Indices heat map in MSM (muscat security market)

Answer 1

A heat map is basically a graphical representation of a data in the form of various boxes of different sizes and different colors. The colors & box sizes represent different values with respect to different variables which are important to the analysis. It helps the analyst by giving him/her a quick and easy overview of the topic in contrast to a chart or graph where the analyst has to extensively study the variables and make an inference or decision.

In this context an Indices Heat Map is displayed in the form of various rectangular boxes with colors mostly like red & green meaning going down and going up respectively. There are other shades of red, green, brown etc also. The map may be representing various sectors like banks, personal & household goods, oil & gas, telecommunication, healthcare etc. The colors in these boxes show us how the sectors are performing in the market at a given time and box size show us how much they are affecting the index which they belong to. They may also have additional information as to the total market capitalization of the stocks, percentage change, no. of scrips in the sector etc. Usually if we further click on individual sector, we will be getting another map showing the various stocks that belong to the particular sector and their respective performances.

In the given stock exchange, Muscat Securities Market (MSM), the heat map is made up of indices like the MSM30, Sectoral indices like Financial, Industry, Services and other indices like Shariah and MSMTR. The MSM30, Sectoral indices and MSMTR, all of them have a 10% capping as a maximum weight allowed for any single company in the indices. This helps by giving a proper representation of performances of a wide number of smaller companies. Hence, having a heat map helps the investor in making a proper decision as more companies are represented in the map. It is easier for the investor to choose which stocks are pulling down the index and which ones are helping the index to rise up and thus take positions accordingly.