Confused what is BSE SENSEX?
The Sensex has a very important figure arrived at indicator …The Sensex is supposed to be an indicator of the stocks in the BSE. This will show general market trends .. people buy and sell and may treat Sensex as a company !!! on that Sensex it self also in VAYADA Marketing.. Future Markets Officially…. It is simplified here.. To show this accurately, the Sensex is calculated taking into consideration stock prices of 30 different BSE listed companies. It is calculated using the “free-float market capitalization” method. This is a world wide accepted method as one of the best methods for calculating a stock market index.
The method used for calculating the Sensex and the 30 companies that are taken into consideration are changed from time to time. This is done to make the Sensex an accurate index and so that it represents the BSE stocks properly. Great Brains and experts with mutual respect and consideration of all government legal Finance advisors and Monitoring experts meet and review 3 monthly default. They can revise or review and enforce conditions.. It is better if we first look at
market capitalization meanings
&
free-float market capitalization
What is "market capitalization"?
Market cap or market capitalization is simply the worth of a company in terms of it’s shares! To put it in a simple way, if you were to buy all the shares of a particular company, what is the amount you would have to pay? That amount is called the “market capitalization”!
To calculate the market cap of a particular company, simply multiply the “current share price” by the “number of shares issued by the company”!
Depending on the value of the market cap, the company will either be a
To calculate the market cap of a particular company, simply multiply the “current share price” by the “number of shares issued by the company”!
Depending on the value of the market cap, the company will either be a
“mid-cap” or “large-cap” or “small-cap” company! Now the question is, how do YOU calculate the market cap of a particular company?
Having seen what market cap is and how to find out the market cap of a particular company, let us try to understand the concept of “free-float market cap”
Having seen what market cap is and how to find out the market cap of a particular company, let us try to understand the concept of “free-float market cap”
What is "free-float market capitalization"?
Many different types of investors hold the shares of a company!
The Govt. Employees, Promoters , Owners ,FDI etc…
Now, only the “open market” shares that are free for trading by anyone, are called the “free-float” shares. When we are calculating the Sensex, we are interested in these “free-float” shares!
A particular company, may have certain shares in the open market and certain shares that are not available for trading in the open market.
According the BSE, any shares that DO NOT fall under the following criteria, can be considered to be open market shares:
- Holdings by founders/directors/ acquirers which has control element
- Holdings by persons/ bodies with "controlling interest"
- Government holding as promoter/acquirer
- Holdings through the
- Strategic stakes by private corporate bodies/ individuals
- Equity held by associate/group companies (cross-holdings)
- Equity held by employee welfare trusts
- Locked-in shares and shares which would not be sold in the open market in normal course.
A company has to submit a complete report about “who has how many of the company’s shares” to the BSE. On the basis of this, the BSE will decide the “free-float factor” of the company. The “free-float factor” is a very valuable number! If you multiply the "free-float factor" with the “market cap” of that company, you will get the “free-float market cap” which is the value of the shares of the company in the open market!
A simple way to understand the “free-float market cap” would be, the total cost of buying all the shares in the open market!
So, having understood what the “free float market cap” is, now what? How do you find out the value of the Sensex at a particular point? Well, it’s pretty simple….
So, having understood what the “free float market cap” is, now what? How do you find out the value of the Sensex at a particular point? Well, it’s pretty simple….
First: Find out the “free-float market cap” of all the 30 companies that make up the Sensex!
Second: Add all the “free-float market cap’s” of all the 30 companies!
Third: Make all this relative to the Sensex base. The value you get is the Sensex value!
Second: Add all the “free-float market cap’s” of all the 30 companies!
Third: Make all this relative to the Sensex base. The value you get is the Sensex value!
The “third” step….?!!??? To understand it, you will need only to understand “ratios and proportions”
Suppose, for a “free-float market cap” of Rs.100,000... the Sensex value is 400…
Then, for a “free-float market cap” of Rs.150,000 the Sensex value will be..600 50 % rise in free float cap similarly sensex will move by same % to 600
If the sensex goes down say 200 then free float market cap would be 50,000
Please Note: Every time one of the 30 companies has a “stock split” or a "bonus" etc. appropriate changes are made in the “market cap” calculations.
Now, there is only one question left to be answered, which 30 companies, why those 30 companies, why no other companies?
The 30 companies that make up the Sensex are selected and reviewed from time to time by an “index committee”. This “index committee” is made up of academicians, mutual fund managers, finance journalists, independent governing board members and other participants in the financial markets.
Now, there is only one question left to be answered, which 30 companies, why those 30 companies, why no other companies?
The 30 companies that make up the Sensex are selected and reviewed from time to time by an “index committee”. This “index committee” is made up of academicians, mutual fund managers, finance journalists, independent governing board members and other participants in the financial markets.
The main criteria for selecting the 30 stocks is as follows:
Market capitalization: The company should have a market capitalization in the Top 100 market capitalization’s of the BSE. Also the market capitalization of each company should be more than 0.5% of the total market capitalization of the Index.
Trading frequency: The company to be included should have been traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like share 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.
Industry representation: The companies should be leaders in their industry group.
Listed history: The companies should have a listing history of at least one year on BSE.
Track record: In the opinion of the index committee, the company should have an acceptable track record.
Trading frequency: The company to be included should have been traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like share 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.
Industry representation: The companies should be leaders in their industry group.
Listed history: The companies should have a listing history of at least one year on BSE.
Track record: In the opinion of the index committee, the company should have an acceptable track record.
No foully of any form found.
This criteria discipline is observed meticulously…. We have heard scams but it is reliable .
Base year 1978 Position set to 30 Companies market capitalization and calculation set ( 100) This is taken for DATA purposes and 3 months avg … so some trade tricks are taken care off…!)) 100 setting backwardly done to prove the affectivity and to nullify the mess advantage seekers and smart play . 1-1-1986 first launched..( sensex in 1992 is 1023 points)
1-9-2003 free-float market capitalization introduced base line and certain modification… done (Sensex was 4453.24 points )
Using the "Free-float Market Capitalization" ...modified to free float introduced modifications done 21 Feb 2008 .(Sensex was 17578.72 points )
SENSEX | As on 09-09-2011 COMPANIES | The 30 for calculations | ||
Code | Name ( sensex closed to day is 16866.97 points ) | |||
532977 | 1 | Bajaj Auto Limited | ||
500103 | 2 | Bharat Heavy Electricals Ltd. | ||
532454 | 3 | Bharti Airtel Ltd. | ||
500087 | 4 | Cipla Ltd. | ||
533278 | 5 | Coal India Ltd. | ||
532868 | 6 | DLF Ltd. | ||
500010 | 7 | HDFC | ||
500180 | 8 | HDFC Bank Ltd. | ||
500182 | 9 | Hero Honda Motors Ltd. | ||
500440 | 10 | Hindalco Industries Ltd. | ||
500696 | 11 | Hindustan Unilever Ltd. | ||
532174 | 12 | ICICI Bank Ltd. | ||
500209 | 13 | Infosys Technologies Ltd. | ||
500875 | 14 | ITC Ltd. | ||
532532 | 15 | Jaiprakash Associates Ltd. | ||
532286 | 16 | Jindal Steel & Power Ltd. | ||
500510 | 17 | Larsen & Toubro Limited | ||
500520 | 18 | Mahindra & Mahindra Ltd. | ||
532500 | 19 | Maruti Suzuki India Ltd. | ||
532555 | 20 | NTPC Ltd. | ||
500312 | 21 | ONGC Ltd. | ||
500325 | 22 | Reliance Industries Ltd. | ||
500112 | 23 | State Bank of | ||
500900 | 24 | Sterlite Industries ( | ||
524715 | 25 | Sun Pharmal Industries Ltd. | ||
532540 | 26 | Tata Consult Services Limited | ||
500570 | 27 | Tata Motors Ltd. | ||
500400 | 28 | Tata Power Company Ltd. | ||
500470 | 29 | Tata Steel Ltd. | ||
507685 | 30 | Wipro Ltd. | ||
Have a Look at the Companies for BSE index calculation changed …. With dates…
Date id Exit from BSE index direct surveillance Replaced byID Companies
3-Aug-92 | 600 | Zenith Ltd. | 493 | Bharat Forge Ltd. |
19-Aug-96 | 102 | Ballarpur Industries Ltd. | 101 | Arvind Mills Ltd. |
493 | Bharat Forge Ltd. | 490 | Bajaj Auto Ltd. | |
20 | 103 | Bharat Heavy Electricals Ltd. | ||
878 | Ceat Tyres Ltd. | 390 | BSES Ltd. | |
40 | Century Textiles & Industries Ltd. | 830 | Colgate-Palmolive ( | |
690 | Gujarat State Fertilizers & Chemicals Ltd. | 425 | Gujarat Ambuja Cements Ltd. | |
500 | Hind. Motors | 104 | HPCL | |
720 | Indian Organic | 15 | ICICI | |
303 | Indian Rayon | 116 | IDBI | |
480 | Kirloskar Cummins | 105 | IPCL | |
460 | Mukand Iron | 108 | MTNL | |
560 | Phlips | 359 | Ranbaxy Lab. | |
540 | Premier Auto | 112 | State Bank of | |
550 | Siemens | 113 | Steel Authority of | |
575 | 770 | Tata Chemicals | ||
16-Nov-98 | 101 | Arvind Mills | 870 | Castrol |
620 | G. E. Shipping | 209 | Infosys Technologies | |
105 | IPCL | 304 | NIIT Ltd. | |
113 | Steel Authority of | 672 | Novartis | |
10-Apr-00 | 116 | I.D.B.I | 124 | Dr. Reddy’s Laboratories |
850 | Indian Hotels | 364 | Reliance Petroleum | |
770 | Tata Chem | 376 | Satyam Computers | |
400 | Tata Power | 5537 | Zee Telefilms | |
8-Jan-01 | 672 | Novartis (I) Ltd. | 87 | Cipla Ltd. |
7-Jan-02 | 500304 | NIIT Ltd. | 532281 | HCL Technologies |
500520 | Mahindra & Mahindra | 500182 | Hero Honda Motors Ltd. | |
31-May-02 | 500015 | ICICI Ltd. | 532174 | ICICI Bank Ltd. |
10-Oct-02 | 500364 | Reliance Petroleum Ltd. | 500010 | HDFC Ltd. |
10-Nov-03 | 500870 | Castrol India Ltd. | 532454 | Bharti-Tele-Ventures Ltd. |
500830 | Colgate-Palmolive ( | 500180 | HDFC Bank Ltd. | |
500660 | Glaxo Smithkline Pharma. Ltd. | 500312 | ONGC Ltd. | |
532281 | HCL Technologies Ltd. | 500400 | Tata Power Company Ltd. | |
500790 | Nestle ( | 507685 | Wipro Ltd. | |
19-May-04 | 500510 | Larsen & Toubro Ltd. | 532500 | Maruti Udyog Ltd. |
27-Sep-04 | 500108 | Mahanagar Telephone Nigam Ltd. | 500510 | Larsen & Toubro Ltd. |
6-Jun-05 | 500104 | Hindustan Petroleum Corp Ltd. | 532555 | National Thermal Power Corpn. Ltd. |
505537 | Zee Telefilms Ltd. | 532540 | Tata Consultancy Services Ltd. | |
12-Jun-06 | 500400 | Tata Power Ltd. | 532712 | Reliance Communication Ltd. |
9-Jul-07 | 500182 | Hero Honda Motors Ltd. | 500520 | Mahindra & Mahindra Ltd. |
500124 | 532868 | |||
14-Mar-08 | 500490 | Bajaj Auto Ltd. | 532532 | Jaiprakash Associates Ltd. |
28-Jul-08 | 500425 | Ambuja Cements Ltd. | 500900 | Sterlite Industries Ltd. |
500087 | Cipla Ltd. | 500400 | Tata Power Co. Ltd. | |
12-Jan-09 | 500376 | Satyam Computers Ltd. | 524715 | Sun Pharmaceutical Industries Ltd. |
29-Jun-09 | 500359 | Ranbaxy Laboratories Ltd. | 500182 | Hero Honda Motors Ltd. |
3-May-10 | 524715 | Sun Pharmaceutical Industries Ltd. | 500087 | Cipla Ltd. |
26-May-10 | 500300 | Grasim Industries Ltd. | 532286 | Jindal Steel & Power Ltd. |
6-Dec-10 | 500410 | ACC Ltd. | 532977 | Bajaj Auto Ltd. |
8-Aug-11 | 500390 | Reliance Infrastructure Ltd. | 533278 | Coal India Ltd. |
532712 | Reliance Communications Ltd. | 524715 | Sun Pharmaceutical Industries Ltd. |
^ removed from computation of SENSEX ^^ added
This is written after studying BSE ,NSE ,Wikipedia, Money Control , and web info available.
If one is not in BSE index contributor list ,,,,it is not disgrace . Only getting this up is not the ONLY CRITERIA FOR A GOOD COMPANY evaluation
If one is not in BSE index contributor list ,,,,it is not disgrace . Only getting this up is not the ONLY CRITERIA FOR A GOOD COMPANY evaluation
Compiled by dr h g joshi
