Sensex Calculation

SENSEX CALCULATION
G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT
1/18/2014
What is SENSEX?
The sensex short form of BSE-sensitive index, is a market capitalization weighted index of 30 stocks representing a sample of large well established and financially sound companies.
History of SENSEX
Sensex, first compiled in 1986, is an index of BSE, situated in financial capital of India (Mumbai) was calculated on a Market Capitalization-weighted methodology of 30 component stocks. Since September 1, 2003, SENSEX is being calculated on free-float market capitalization methodology.
Objective of SENSEX
The SENSEX is the benchmark index of Indian capital market with wide acceptance among individual investors, institutional investors, foreign investors and fund managers. Main objectives are:To measure market movements. Benchmark for fund performance. For index based derivative products.
Key points of BSE

Base year Base index value Date of launch Method of calculation 1978-79 100 01-01-1986 Launched on full market capitalization method shifted to free floated market capitalization. 30 15 seconds
No of scrips Index calculation frequency

5 G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT
1/18/2014
FREE FLOAT MARKET CAPITATION
Value of shares available for public trading Excluding the following shares:
Promoters Equity Holdings Through FDI
Holdings by private corporate

Holdings by Employee Welfare Funds
1/18/2014
Criteria for listing of scrips

Quantitative criteria:Market capitalization Liquidity
Trading frequency Number of trades Value of share traded Continuity Industry representation Listed history Qualitative criteria:Track record
7 G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT 1/18/2014
How SENSEX 30 Shares are Selected
Listing History Trading Frequency Rank based on the market Capitation ( Should be among top 100) Market Capitation Weight Industry/ sector they belong Historical Record
Liquidity
Trading Frequency: The scrip should have been
traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like scrip suspension etc.
Number of Trades: The scrip should be among
the top 150 companies listed by average number of trades per day for the last one year.
Value of Shares Traded:
The scrip should be among the top 150 companies listed by average value of shares traded per day for the last one year.
G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT 1/18/2014
30 Most Traded Companies Of BSE

ACC
AIRTEL
BHEL DLF
GRASIM
10
1/18/2014

HDFC HDFC BANK
HINDALCO
ICICI INFOSYS
11
1/18/2014

ITC LIMITED
JAYPEE L&T M&M MARUTI
12
1/18/2014

NTPC ONGC RELIANCE INFRA RANBEXY
RELIANCE COMM
13
1/18/2014

RIL SUN PHARMA SBI STERLITE TATA MOTORS

WIPRO HUL
TCS
TATA STEEL TATA POWER
HOW SENSEX CALCULATED

The formula for calculating the SENSEX
= (Sum of Free flow mar cap of 30 companies)* Index Factor
Index factor = 100/ Market cap value in 1978-79 Where, 100 is the index value during 1978-79. Example Assume SENSEX has only 2 stocks namely SBI and RELIANCE. Total shares in SBI are 500 out of which 200 are held by Govt . Reliance has 1000 shares out of 500 are held by promoters. Assume Stock price of SBI Rs.100 and RELIANCE RS.200. Market Capitation of 2 companies={ 16 (300*100)+(500*200)}=Rs 130,000
Calculation of SENSEX
An index is calculated daily by tracking the share prices of its constituent member companies. SENSEX is calculated using market capitalization method. Every index is associated with base year. The base date for SENSEX is
1st April 1979 and base point is 100.

The basic calculation of an index, on a particular date, involves the following steps:
Calculate the market capitalization of each individual company

comprising the index. For example if a company has 195 million shares outstanding and its closing price on that day at BSE was Rs.350 per share
17
then its market capitalization G.Venkatachalam, M.Com, MBA, on that date is 195*350= Rs.68,250 million.
M.Phil,(Ph.D)/AP/Finance/JIT 1/18/2014
Calculation Of SENSEX
Calculate the total market capitalization (TMC) by adding
the individual market capitalization of all the companies in the index. Assume that the total market capitalization of all companies in the index adds up to Rs.26,175 billion on that date. Computing of the index now requires the index value and total market capitalization of the previous day. If on the previous day, the total market capitalization was Rs.25,310 billion and the index was 10635, the index for the next day is calculated as: Index value= Index on previous day TMC for current day/TMC of previous day = (10,63526,175/25,310) Thus, the index is 10,998 G.Venkatachalam, M.Com, MBA, implying that the index rose by 363 points over the previous 1/18/2014 18 M.Phil,(Ph.D)/AP/Finance/JIT day.
Who are Bulls & Bears Those who buy shares in anticipation of increase in prices are commonly referred to as bulls And those who sell shares anticipating a fall in prices are referred to as bears. So a bullish market implies a rising market since that is when the bulls or the buyers enter the field. Similarly, a bearish market refers to a falling market attracting the bears or the sellers.
10 Biggest falls in SENSEX

No. Date Registered Fall
1
2 3 4 5 6 7 8
Jan 21, 2008

Oct 24, 2008 March 17, 2008 Jan 22, 2008 Feb 11, 2008 May 18, 2006 Oct 10, 2008 March 13, 2008
1408.35
1070.63 951.03 857 833.98 826 800.10 770.63
9
10
Dec 17, 2007

Jan 07, 2009
769.48
749.05
20
SENSEX CRASH
1/18/2014
5 Biggest Single-day Gains

No. Date
1 2 Jan 25, 2008 Nov 14, 2007
Close
18361.66 19929.06
Pre. Close Net Chg % Chg

17221.70 19035.48 1139.92 893.58 6.6 4.7
3
4 5
Oct 23, 2007

Jan 23, 2008 Oct 09, 2007
18492.84
17594.10 18280.24
17613.99
16729.94 17491.39
878.85
864.13 788.85
5.0
5.2 4.5
21
1/18/2014
Key Staff of BSE

Chairman: Mr.Jagdish Capoor
CEO: Mr.Rajnikant Patel
22
1/18/2014
NIFTY
The National Stock Exchange(NSE) is associated with NIFTY and it is also calculated by the same methodology but with two key differences Base year is 1995 and Base value is 1000 NIFTY is calculated based on 50 Stocks.
23
1/18/2014
24
1/18/2014

Sensex Calculation

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sensex Calculation

Uploaded by

Copyright:

Available Formats

SENSEX CALCULATION

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

Key points of BSE

No of scrips Index calculation frequency

FREE FLOAT MARKET CAPITATION

Holdings by private corporate

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

Criteria for listing of scrips

How SENSEX 30 Shares are Selected

Number of Trades: The scrip should be among

Value of Shares Traded:

30 Most Traded Companies Of BSE

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

30 Most Traded Companies Of BSE

30 Most Traded Companies Of BSE

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

30 Most Traded Companies Of BSE

30 Most Traded Companies Of BSE

30 Most Traded Companies Of BSE

HOW SENSEX CALCULATED

1st April 1979 and base point is 100.

Calculate the market capitalization of each individual company

10 Biggest falls in SENSEX

Jan 21, 2008

Dec 17, 2007

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

5 Biggest Single-day Gains

Pre. Close Net Chg % Chg

Oct 23, 2007

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

Key Staff of BSE

CEO: Mr.Rajnikant Patel

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

G.Venkatachalam, M.Com, MBA, M.Phil,(Ph.D)/AP/Finance/JIT

You might also like