I use an Interapid indicator. It's Swiss made, and the quality is outstanding. It is technically a thousandths indicator, but each graduation on the dial is half of that, or .0005 inches.
It is very easy to "read between the lines" and increase the resolution to .0001. The indicator's total range is +- .070.
Whatever you decide, don't buy any indicator which has a simple plunger for axial measurements. Get the angled lever type which can be positioned at any angle you need. Great for tramming bores, leveling, etc.
I don't recommend buying a "tenths" (.0001) indicator. I've used them for precision work, but they tend to bounce too much on irregular surfaces. Very difficult to read. Unless you're sweeping a micro-finished surface, the tenths indicators are unusable.
Yes, get a magnetic base. You can get those quite cheap. A good indicator won't be.