Sensex
Upcoming SlideShare
Loading in...5
×
 

Sensex

on

  • 240 views

Brief ppt on Sensex

Brief ppt on Sensex

Statistics

Views

Total Views
240
Views on SlideShare
240
Embed Views
0

Actions

Likes
0
Downloads
21
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Sensex Sensex Presentation Transcript

  • Agenda  Stock  Stock Market  Stock Market Basics  BSE  Free Float Method  PE Ratio
  • Stock  The stock (also capital stock) of a corporation constitutes the equity stake of its owners.  Stock is a share in the ownership of a company  A shareholder or stockholder is an individual or institution (including a corporation) that legally owns a share of stock in a public or private corporation.  A holder of stock (a shareholder) has a claim to a part of the corporation's assets and earnings.
  • Stock Basics  The Bulls  The Bears  The Other Animals on the Farm - Chickens and Pigs View slide
  • Stock Market  A stock market is a physical place, where brokers gather to buy and sell stocks and other securities.  It is also known as a stock exchange. View slide
  • BSE  Bombay Stock Exchange  11th largest stock exchange in the world by market capitalisation(as on 31st December, 2012)  Established in 1875  Oldest Stock Exchange in India
  •  Ashish Chauhan (MD and CEO)  ISO 9001:2000 certified  2nd to receive Information Security Management System Standard  Index  BSE SENSEX  BSE Small Cap  BSE Mid-Cap  BSE 500
  • Sensex  S&P Bombay Stock Exchange Sensitive Index  Also-called the BSE 30  Sens was coined by Deepak Mohoni, a stock market analyst  Calculated using free float capitalization method  The index has increased by over ten times from June 1990 to the present
  • Constituents of Sensex Housing Development Finance Corporation Hindalco Industries GAIL Cipla Tata Steel ICICI Bank Bharat Heavy Electricals Larsen & Toubro Jindal Steel & Power State Bank Of India Mahindra & Mahindra Bharti Airtel HDFC Bank Tata Motors Maruti Suzuki Hero Motocorp Hindustan Unilever Tata Consultancy Services Infosys ITC NTPC Oil and Natural Gas Corporation Sterlite Industries DLF Reliance Industries Wipro Bajaj Auto Tata Power Sun Pharmaceutical Coal India
  • Steps In Calculating Sensex 1. Market capitalization of each of the 30 companies comprising the index is first determined 2. Market capitalization is then multiplied to the free-float factor to derive the free- float market capitalization. 3. The free-float market capitalization of the Index constituents is then divided by a number known as the Index Divisor
  • Market Capitalization  Market capitalization is the aggregate valuation of the company based on its current share price and the total number of outstanding stocks.
  • Market Capitalization  A company has 20 million outstanding shares and the current market price of each share is Rs100. Market capitalization of this company will be 200,00,000 x 100=Rs 200 crore. Stocks of companies are of three types.  The stocks with a market cap of Rs 10,000 crore or more are large cap stocks.  Market cap between Rs 2 crore and 10 crore are mid cap stocks  Less than Rs 2 crore; small cap stocks.
  • Free Float Method  A method by which the market capitalization of an index's underlying companies is calculated.
  •  Specifically, the following categories of holding are generally excluded from the definition of Free-float:  Shares held by founders/directors/acquirers which has control element  Shares held by persons/ bodies with "Controlling Interest"  Shares held by Government as promoter/acquirer  Holdings through the FDI Route  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.
  • Free-float Bands % Free- Float Free-Float Factor % Free-Float Free-Float Factor >0 – 5% 0.05 >50 – 55% 0.55 >5 – 10% 0.10 >55 – 60% 0.60 >10 – 15% 0.15 >60 – 65% 0.65 >15 – 20% 0.20 >65 – 70% 0.70 >20 – 25% 0.25 >70 – 75% 0.75 >25 – 30% 0.30 >75 – 80% 0.80 >30 – 35% 0.35 >80 – 85% 0.85 >35 – 40% 0.40 >85 – 90% 0.90 >40 – 45% 0.45 >90 – 95% 0.95 >45 – 50% 0.50 >95 – 100% 1.00
  • Example  If a company has a float of 10 million shares and outstanding shares of 12 million, the percent of float to outstanding is 83%.  A company with an 83% free float falls in the 80-85% free-float factor  Or 0.85, which is then multiplied by its market cap (e.g., $120 million (12 million shares x .$10/share) x 0.85 = $102 million free-float capitalization).
  • Advantages of Free Float  It depicts the market more rationally.  It removes undue influence of government or promoters share holding, there by giving them equal opportunity for companies to be in the SENSEX.  Almost all the indices over the world are calculated by this methodology.  It gives fund managers more authentic information
  • Sensex Calculation  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!
  • Example  Suppose, for a “free-float market cap” of Rs.100,000 Cr... the Sensex value is 4000  Then, for a “free-float market cap” of Rs.150,000 Cr.  The Sensex value will be..
  •  Sensex value will be 6000
  • P/E Ratio  P/E Ratio is a valuation ratio of a company's current share price compared to its per-share earnings. Market Value per Share Earnings per Share (EPS)
  •  For example,  If a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share,  The P/E Ratio for the stock would be 22.05 ($43/$1.95).
  •  High P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E.
  • PE RATIO OF SENSEX  PE is a ratio of the market price and EPS for a company  For Sensex  PE = market price * number of shares outstanding / EPS* number of shares outstanding
  •  market price * number of shares outstanding=market capitalization  EPS * number of shares outstanding = net profit  So, PE=market capitalisation/net profit
  • Calculation of PE of Sensex  First calculate the market capitalisation of all 30 stocks  Add them  Then you calculate the net profits of each of the 30 stocks  Sum them up  The ratio of total market cap to total net profit is the Sensex PE
  • Example  Total market capitalisation = Sum Of individual market capitalisation= Rs 16,25,367 crore  Net Profit= Sum of Individual Net Profit = Rs 1,17,982 crore  Hence, Sensex PE= 1625367/117982=13.78
  • PE of Sensex(Last 12 months) Month P / E Mar-13 17.19 Feb-13 17.43 Jan-13 17.88 Dec-12 17.43 Nov-12 16.90 Oct-12 17.31 Sep-12 16.68 Aug-12 16.68 Jul-12 16.71 Jun-12 16.37 May-12 16.49 Apr-12 17.63
  • Criteria for selecting the 30 stocks is as follows  Eligible Companies  Listing History  Market Capitalization  Trading frequency  Industry/Sector Representation  Revenue
  • Process of Selecting 30 Stocks  Ranked  The top 75 are identified.  All stocks identified are then combined and sorted  Stocks with a cumulative value traded greater than 98% are excluded.  Remaining stocks are then sorted by float market capitalization.  Stocks with a weight of less than 0.5% are excluded.
  • Sectorwise Market Capitalisation 25.46 17.99 14.55 13.92 9.63 5.76 4.51 3.54 2.37 2.26 Index Market Capitalization Finance Information Technology FMCG Oil & Gas Transport Equipments Health Care Capital Goods Metal,Metal Products & Mining Power Telecom
  • World’s Biggest Stock Exchange 1. New York Stock Exchange  Market cap: $13.4 trillion 2. Nasdaq  Market cap: $3.9 trillion 3. Tokyo Stock Exchange  Market cap: $3.8 trillion 4. London Stock Exchange  Market cap: $3.6 trillion 5. Euronext  Market cap: $2.9 trillion 6. Shanghai Stock Exchange  Market cap: $2.7 trillion 7. Hong Kong Stock Exchange  Market cap: $2.7 trillion 8. Toronto Stock Exchange ○ Market cap: $2.2 trillion 9. Bombay Stock Exchange  Market cap: $1.6 trillion 10. National Stock Exchange  Market cap: $1.6 trillion As per forbes.com