NSE AND HOW IT’S INDICES ARE CALCULATED

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NSE AND HOW IT’S INDICES ARE CALCULATED

  1. 1. WELCOME
  2. 2. NSE AND HOW IT’S INDICES ARE CALCULATED
  3. 3. What is a Stock exchange..?? It’s a place where trading of shares is done inform of buying and selling .
  4. 4. Major stock exchange’s in India.. National stock exchange Bombay stock echange over the counter exchange
  5. 5. NATIONAL STOCK EXCHANGE  India’s largest financial market  Established in November 1992  Third in the world in terms of volume  A market capitalization of around US$1 Trillion and over 1,652 listings as of July 2012
  6. 6. OBJECTIVES  Nation wide trading facility for all type of securities.  Equal access to investors all over the country through appropriate communication network.  Meeting international benchmarks and standards.  Enabling shorter settlement cycles and book entry settlement system.
  7. 7. NSE LAUNCHED SEVERAL INDICES..  S&P CNX NIFTY (STANDARD &POOR’S CRISIL NSE INDEX)  CNX NIFTY JUNIOR  CNX 100 (=S&P CNX NIFTY +CNX NIFTY JUNIOR)  S&P CNX 500 (=CNX 100+400 MAJOR PLAYERS ACROSS 72 INDUSTRIES)  CNX MIDCAP( INTRODUCED ON 18 JULY 2005)
  8. 8. S&P CNX NIFTY  It’s also called nifty50 or simply nifty ,is a stock market index and bench mark index for Indian equity market.  Owned and managed by india index services and products limited (IISL). Joint venture of NSE and CRISIL .  IISL India's first company focused index as a core product.  IISL marketing agreement and license with standard & poor for co-branding equity indices.
  9. 9.  S&P CNX NIFTY COVERS 22 SECTORS OF THE INDIAN ECONOMY.  S&P CNX NIFTY STOCKS REPRESENT ABOUT 67.27% OF THE FREE FLOAT MARKET CAPITALISATION OF STOCKS LISTED AT NSE .  S&P CNX NIFTY IS A FREE FLOAT MARKET CAPITALISATION WEIGHTED INDEX . UPTO 26 JUNE 2009 IT WAS CALCULATED ON FULL MARKET CAPITALISATION METHODOLOGY.
  10. 10.  BASE PERIOD FOR S&P CNX NIFTY INDEX IS 3 NOVEMBER 1995.  BASE VALUE OF THE INDEX HAS BEEN SET AT 1000 , AND BASE CAPITAL OF RS.2.06 TRILLION  S&P CNX NIFTY DEVELOPED BY AJAY SHAH AND SUSAN THOMAS
  11. 11. S&P CNX NIFTY50 COMPANIES :
  12. 12. HOW NIFTY50 STOCKS SELECTED:  LISTING HISTORY  TRADING FREQUENCY  RANK BASED ON THE MARKET CAP (SHOULD BE AMONG TOP 100)  MARKET CAPITALISATION WEIGHT  INDUSTRY/SECTOR THEY BELONG  HISTORICAL RECORD
  13. 13. FREE FLOAT MARKET CAPITALISATION.. THE VALUE OF ALL SHARES AVAILABLE FOR PUBLIC TRADING EXCLUDING :  THE PROMOTERS EQUITY  HOLDING THROUGH FDI ROUTE  HOLDING BY PVT. CORPORATES  HOLDING BY EMPLOYEE WELFARE FUND.
  14. 14. How NIFTY is calculated.. The formula for calculating the NIFTY = (SUM OF FREE FLOW MARKET CAP OF 50 BENCHMARK STOCKS)*INDEX FACTOR Index Factor = 1000/Market Cap Value in 1995. Where, 1000 is the Index value during 1995
  15. 15. Example: Assume NIFTY has only 2 stocks namely SBI and RELIANCE. Total shares in SBI are 500 out of which 200 are held by Government and only 300 are available for public trading. RELIANCE has 1000 shares out of which 500 are held by promoters and 500 are available for trading. Assume price of SBI Stock is Rs.100 and Reliance is Rs.200.
  16. 16. Then "free-Floating Market Cap" of these 2 companies = (300*100+500*200) = 30000+100000 = Rs. 130000 Assume Market Cap during the year 1995 was Rs.25000 Then NIFTY = 130000*1000/25000 = 5200. The methodology in the example is exactly followed to calculate the SENSEX, only difference being the inclusion of 30 stocks.
  17. 17. THANK YOU

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