A stock index is calculated using a specific methodology that varies depending on the index provider. However, the most common method is a market capitalization-weighted calculation. Here's a simplified explanation of how a stock index is typically calculated:

1. Selecting the stocks: The index provider chooses a selection of stocks that represent a particular market, sector, or theme.

2. Determining the weightage: Each stock's weightage in the index is determined based on its market capitalization (number of outstanding shares multiplied by the stock price). Larger companies with higher market capitalizations have a greater impact on the index.

3. Calculating the index value: The index value is calculated by adding up the market capitalization of all the stocks in the index and dividing it by a divisor. The divisor is a constant number used to ensure the index value remains consistent over time.

4. Adjusting for changes: When there are corporate actions such as stock splits, mergers, or new additions to the index, adjustments are made to maintain the index's representativeness and continuity.

By following this process, stock indexes provide a snapshot of the overall performance of a specific market or segment, allowing investors to track and compare the performance of various stocks and investment portfolios.