The primary objective of the Index is to have a

benchmark by which the stock price performance can be

compared to over a period of time. In particular, it is
designed to provide investors with a sense of how the
market is performing. Thus, it is similar to other
indicators that track various sectors of the economic
activity such a the gross national product, consumer
price index, etc.

Some major international indices are NYSE, FTSE

(London), NZSE 40, SENSEX 30
On November 1, 1991 the KSE 100 Index was
introduced.

It is capital weighted index and consists of 100

companies representing about 86% of market
capitalization of the Exchange.

In November 1994 it was recomposed by the Baring

Securities London and rules were framed for its re-
composition.
• ON - LINE COMPUTATION OF THE INDEX

During market hours, prices of the Index scrips, at

which trades are executed, are automatically used by
the trading computer to calculate the KSE-100 Index
and continuously make up-dation on all trading
workstations connected to the KSE trading computer
on real time basis.

The KSE 100 Index re-composed on semi-annually

basis
The selection criteria for stock inclusion in the
recomposed KSE 100 Index are:

SECTOR RULE
Largest market capitalization in each of the 34
sector of the Exchange, excluding Open – end
Mutual Fund sector;

CAPITALIZATION RULE
The remaining 66 companies are taken up on the
basis of market capitalization companies in
descending order.
A number of the 34 top sector companies may also
qualify for inclusion on the basis of their market
capitalization: i.e. companies may qualify under
Sector Rule or under Capitalization Rule, or
under both. However, in that case the company
shall be included on the basis of Sector Rule.
 Close-end Mutual Fund Tobacco Chemical

Modaraba Refinery Paper & Board

Leasing Companies Power Generation & Vanapati & Allied

Distribution
Inv. Banks / Inv. Cos. / Sec. Leather & Tanneries
Oil & Gas Marketing
Cos
Companies Foods & Personal Care
Commercial Banks Products
Oil & Gas Exploration
Insurance Companies Glass & Ceramics
Engineering Miscellaneous
Textile Spinning
Automobile Assembler
Textile Weaving
Automobile Parts &
Textile Composite
Accessories
Woollen Cables & Electric Goods
Synthetics & Rayon Transport
Jute Technology & Communication
Sugar & Allied Fertilizer
Cement Pharmaceutical
SECTOR RULE:

Value-based Rule:
A company which is the largest in its sector by a minimum
of 10% in capitalization than the present largest in the sector
(in the index) will enter in the index on re-composition.

Time-based Rule:
A company which is the largest, but not more than 10%
greater in value than the present largest company in the
sector will enter the index after maintaining its position as
largest in the sector for two consecutive re-composition
period.
CAPITALIZATION RULE:

Time-based Rule:
A company may qualify for entry if it exceeds the
market capitalization of the last stock in the index
selected on the basis of market capitalization for two
re-composition periods.

A qualifying company automatically pushes out the

lowest capitalization selected stock in the index.
RULES FOR NEW ISSUES:

A newly listed company or a privatized company

shall qualify to be included in the existing index (on
day of recomposition) if the market capitalization of
the new or privatized company is at least 2% of the
total market capitalization.
VALUE Companies largest in its Sector by a
BASE minimum 10% at the last cut off date.

TIME Companies which are greater but less

BASE than 10%. INDEX

SECTOR BUFFER
Companies will enter the Index after
maintaining its position for last Two cut
off dates.
 TIME BASE

Companies which are amongst the top 66

companies on market capitalization basis.

MARKET CAP. BUFFER

Companies will enter the Index after maintaining its
position for last Two cut off dates.

INDEX
Hypothetical Example
Step 1
The Base Period Day 1
Stock Share Price (Rs.) No. of Shares Market Value
(Rs.)
A 20.00 50,000,000 1,000,000,000.00
B 30.00 100,000,000 3,000,000,000.00
C 40.00 150,000,000 6,000,000,000.00
Total Market Capitalization 10,000,000,000.00

Note: Base Period Value / Base Divisor = Rs.10,000,000,000.00 = 1000.00

Step 2
Index Value as on Day 2
Stock Share Price (Rs.) No. of Shares Market Value
(Rs.)
A 22.00 50,000,000 1,100,000,000.00
B 33.00 100,000,000 3,300,000,000.00
C 44.00 150,000,000 6,600,000,000.00
Total Market Capitalization 11,000,000,000.00

11,000,000,000.00
Index = -------------------------- = 1.10 * 1000 = 1100
10,000,000,000.00
 The for Calculating the KSE 100 Index is:

Sum of Shares Outstanding x Current Price

----------------------------------------------------------- x 1000
Base Period Value

OR

Market Capitalization
----------------------------------------------------------- x 1000
Base Divisor
 COMPANY NAME INDEX WEIGHTAGE
O. G. D. C. 23.82
P. T. C. L. “A” 7.30
Pakistan Petroleum Limited 6.50
National Bank of Pakistan Limited 6.48
MCB Bank Limited 4.27
United Bank Limited 3.29
Pakistan Oilfields Limited 2.89
Fauji Fertilizer Company Limited 2.20
Pakistan State Oil Company Limited 2.03
Sui Northern Gas Pipelines Limited 1.93