Sensex

SENSEX
The Sensex is an "index". An index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE (Bombay Stock Exchange). The BSE is situated at Bombay. The Nifty is an indicator of all the major companies of the NSE (National Stock Exchange). The NSE is situated at Delhi.

SENSEX
Base Year 1978-79 Base Index Value 100 Date of Launch 01-01-1986 Method of calculation Launched on full market capitalization method and effective September 01, 2003, calculation method shifted to free float market capitalization. Number of scrip 30

Free-float Methodology
It refers to an index construction methodology that takes into consideration only the free-float market capitalization of a company for the purpose of index calculation and assigning weight to stocks in the Index. Free-float market capitalization takes into consideration only those shares issued by the company that are readily available for trading in the market. It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course. A Free-float factor of say 0.55 means that only 55% of the market capitalization of the company will be considered for index calculation.

SENSEX
Assume Sensex has only 2 shares viz., SBI & Tata. Total shares of SBI- 500 (200 are holding by govt. & 300 are available for trading) Price Rs.100 Total shares of Tata- 1000 (500 are holding by promoters & 500 are available for trading) Price Rs. 200 Free floating mkt capitalization= (300*100)+(500*200)= Rs.1,30,000

SENSEX
Assume Mkt cap. during 1978-79 Rs. 25,000

Sensex= (1,30,000/25,000)*100 =520 This methodology is exactly followed to calculate sensex, only difference being the inclusion of 30 stocks

SENSEX

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