IT GIVES DETALILS ABOUT MARKET INDICES

1. INDIAN
STOCK
INDICES
SUBMITTED TO
DEPARTMENT MGT &
COMMERCE
SUBMITTED BY
HILAL AHMAD
ROLL NO. 5180

2. INTRODUCTION
 A STOCK MARKET INDEX IS A MEASURE OF THE
RELATIVE VALUE OF A GROUP OF STOCK IN
NUMERICAL TERMS.AS THE STOCKS WITHIN AN
INDEX CHANGE VALUE,THE INDEX VALUE CHANGE
 A STOCK MARKET INDEX IS CREATED BY SELECTING
A GROUP OF STOCKS THAT ARE REPRESENTATIVE OF
THE WHOLE MARKET.
 IN INDIA CAPITAL MARKET, TWO INDECES PLAY A
VITAL ROLE IN REPRESENTING THE WHOLE SECTOR.
THESE ARE S&P BSE SENSEX AND CNX NIFTY.

3. WHAT IS S&P BSE SENSEX
 SENSEX IS INDEX.INDEX IS BASICALLY AN
INDICATOR.
 IT WAS LAUNCHED IN 1986.
 IT WAS CALCULATED ON A “MARKET
CAPITALISATION WEIGHTED METHODOLOGY”
 THE BASE YEAR OF SENSEX WAS TAKEN AS 1978-
79.
 BASE YEAR VALUE = 100
 NUMBER OF SCRIPS=30
 SINCE SEPTEMBER 2003 SENSEX IS CALCULATED
ON A FREE-FLOAT MARKET CAPITALISATION
METHODOLOGY.

4. HOW TO CALCULATE BSE
SENSEX
 IT IS CALCLATED USING FREE FLOAT
MARKET CAPITALISATION METHOD
(TO UNDERSTAND HOW THE SENSEX IS
CALCULATED WE NEED TO UNDERSTAND
WHAT THE TERM FREE FLOAT MARKET
CAPITALISATION MEAN BUT BEFORE WE
NEED TO UNDERSTAND WHAT IS MARKET
CAPITALISATION)

5. WHAT IS MARKET
CAPITALISATION
 MARKET CAPITALISATION IS SIMPLY THE
WORTH OF A COMPANY IN TERMS OF
SHARES.
 TO CALCULATE THE MARKET
CAPITALISATION OF A PARTICULAR
COMPANY SIMPLY MULTIPLY THE
“CURRENT SHARE PRICE BY THE NUMBER
OF SHARES ISSUED BY THE COMPANY”

6. WHAT IS FREE FLOAT MARKET
CAPITALISATION
 OPEN MARKET SHARES THAT ARE FREE
FROM TRADING BY ANYONE ARE CALLED
THE FREE FLOAT SHARES.
 ACCORDING TO BSE ANY SHARES THAT DO
NOT FALL UNDER THE FOLLOWING
CRITERIA CAN NOT BE CLASSIFIED TO BE
OPEN MARKET SHARES-
 HOLDING OF FOUNDERS/DIRECTORS/
 GOVT HOLDING AS A PROMOTER
 HOLDING THROUGH FDI

7. What is free float?
 THE FREE FLOAT FACTOR IS A VALUABLE NUMBER.
 IF WE MULTIPLY FREE FLOAT FACTOR WITH THE
MARKET CAPITALIZATION OF THE COMPANY WE WILL
GET FREE FLOAT MARKET CAPITALISATION.

8. EXAMPLE
 SUPPOSE,FOR A FREE FLOAT MARKET
CAPITALISATION IS RS. 1000 CRORE, THE
SENSEX VALUE IS 4000, THEN FOR A FREE
FLAOT MARKET CAPITALISATION OF RS.
1500 CRORE. THE SENSEX WILL BE
1500/1000*4000=6000
SO. THE SENSEX VALUE WILL BE 6000,IF
THE FREE FLOAT MARKET CAP COMES TO RS.
1500CR.

9. NIFTY
 NIFTY IS A MAJOR STOCK INDEX IN INDIA INTRODUCES
BY NSE(NATIONAL STOCK EXCHANGE)
 NIFTY IS COINED FROM 2 WORDS “NATIONAL & FIFTY”
 THE BASE YEARIS TAKEN AS 1995
 THE BASE VALUE IS SET TO 1000
 NIFTY IS CALCULATED ON 50 STOCKS.
 THE SELECTION CRITERIA FOR THE 50 STOCKS ARE
ALSO SAME TO THE METHODOLOGY ADOPTED BY
SENSEX

10. THANK YOU