the slides gives comprehensive information on how the sensex and nifty are caluculated and the various companies that make the index

1. 2013
Vincent Konadu Tawiah

2. PREAMBLE
 Stock exchange is that place where trading of shares is
done in terms of sale and purchase. It is a secondary
market for long term capital fund
 There are 22 stock exchange in India. 8 are permanent

3. PRODUCTS OF EXCHANGE

4. NATIONAL STOCK EXCHANGE NSE
•India's largest financial market.
•Established in 1992,
•Ranks third in the world for transacted volume
•The best in terms of sophistication
and advancement of technology
1600 companies
Headquarters Mumbai
Branches Ahmedabad, Chennai, Delhi, Kolkata, Hyderabad
Indore, Kanpur

5. BOMBAY STOCK EXCHANGE
 Established in 1875
 Asia’s first Stock Exchange
 More than 5000 companies
 World's No. 1 exchange in terms of
listed members
 3rd largest Leading exchange in
December 2012

6. LISTING ON STOCK EXCHANGE
 The minimum post-issue paid-up capital of the applicant
company shall be Rs. 10 crore for IPOs
 The minimum issue size shall be Rs. 10 crore; and
 The minimum market capitalization of the Company shall be
Rs. 25 crore
 The above eligibility criteria would be in addition to the
conditions prescribed under SEBI Regulations and other Laws
and Act such as Company’s Act 1956.

7. STOCK INDEX
 A statistical measure of change in an economy or a
securities market
 index based on a statistical compilation of the share prices
of a number of representative stocks

8. TYPES OF STOCK INDICES IN INDIA
 NATIONAL STOCK EXCHANGE
S&P CNX NIFTY, CNX NIFTY JUNOIR, NIFTY 500, THE NIFTY
MIDCAP 50, THE CNX MIDCAP 50
IT, BANK, FMCG, PSE, MNC, ENERGY, PHARMA AND REALTY.
 BOMBAY STOCK EXCHANGE
SENSEX; MID-CAP, SMALL CAP, BSE 100, BSE 200, BSE
DOLLEX,
BSE IT INDEX, BSE CAPITAL GOODS INDEX, AND BSE FMCG

9. S&P CNX NIFTY INDEX
 CNX stands for CRISIL NSE
 owned and managed by IISL
 Started Complied in 1995.
 Is made up 50 Companies out of 1600 of NSE
 covers 22 sectors of the Indian economy
 a free float market capitalization weighted index
 Base value is 1000

10. SECTORS OF NIFTY
SN SECTOR WEIGHT %
1 FINANCIAL SERVICES 25.26
2 IT 16.24
3 ENERGY 15.10
4 CONSUMER GOODS 13.51
5 AUTOMOBILE 8.65
6 PHARMA 6.55
7 METALS 4.92
8 CONSTRUCTION 3.97
9 CEMENT & CEMENT
PRODUCTS
3.19
10 TELECOM 2.03
11 INDUSTRIAL
MANUFACTURING
0.58

11. THE 50 COMPANIES
 ACC
 Ambuja Cements
 Asian Paints
 Axis Bank
 Bajaj Auto
 Bank of Baroda
 BHEL
 BPCL
 Bharti Airtel
 Cairn India
 Cipla
 Coal India
 DLF
 Dr. Reddy's
Laboratories
 GAIL
 Grasim Industries
 HCL Technologies
• HDFC Bank
• Hero MotoCorp
• Hindalco Industries
• HDFC Ltd
• Infosys
• ICICI Bank
• Induslnd Bank Ltd
• IDFC
• ITC Limited
• Jaiprakash Associates
• Jindal Steel and Power
• Kotak Mahindra Bank
• L&T
• Lupin
• Mahindra & Mahindra
• Maruti Suzuki India
• NMDC. Ltd
• NTPC
• ONGC
• Power Grid
Corporation
• PNB
• Ranbaxy
Laboratories
• Reliance
Infrastructure
• Reliance Industries
• Sun Pharmaceutical
• SBI
• Sun Pharmaceutical
• TCS
• Tata Motors
• Tata Power
• Tata Steel
• Ultratech Cement
• Wipro

12. ELIGIBILITY CRITERIA FOR NIFTY
 Liquidity (Impact Cost 0.50% of 90 observation)
 Float-Adjusted Market Capitalization
 Float (at least 10% of its stock available to investors
(float).
 Domicile &Eligible Securities
 The index is reviewed semi-annually

13. S&P BSE SENSEX
 Bombay Stock Exchange Sensitive Index
 Owned and managed by BSE
 Started Complied in 1986.
 Is made up 30 Companies out of 5000 of BSE
 covers 10 sectors of the Indian economy
 Covers about 47% of float market capitalization on BSE
 A free float market capitalization weighted index
 Base value is 100

14. THE 30 COMPANIES
 Bajaj Auto Ltd
 Bharat Airtel
 Coal India Ltd
 Gail India Ltd
 HDFC Bank
 ICICI Bank Ltd
 ITC Ltd
 L & T
 Tata Steel
 Wipro
 Tata Motors
 Bharat Heavy Electicals
 Dr. Reddy’s Laboratories
 Hero Motor Corp
 Jindal Steel And Power
 Mahindra & Mahindra
 Reliance Industries
 Tata Consultancy Services
 Tata Power Company
Cipla Ltd
Hindalco Industries
HDFC Ltd
Infosys Ltd
Maruti Suzuki India
Oil & Natural Gas
Sesa Goa Ltd
State Bank Of India
Sun Pharmaceutical
Hindustan Unilever
Hindalco Ltd

15. ELIGIBILITY CRITERIA FOR SENSEX
 Equities of companies listed on BSE Ltd
 Daily trading for at least for the last 3 months
 Float-Adjusted Market Capitalization
 Absolute turnover

16. SECTORS OF SENSEX
Oil & Gas
14%
Finance 27%
Transport Equipments
10%
Capital Goods

17. FACTORS AFFECTING INDEX
 Individual stock
 Demand & Supply of stock
 Earnings of companies
 Release of other information
 government information/data
 GDP
 RBI Repo/interest rate
 Inflation
 Change of government

18.  Global activities
 Actions of developed countries like USA
 Currency war
 Gold Price
 Rating Agency such as S&P , Wall street
FACTORS AFFECTING INDEX

19. USE OF INDEX
 Benchmarking index for funds & derivatives
 Measure of the health of the economy
 Sensitivity of economy variables on companies

20. DEMAT ACCOUNT
 Demat is the short form of dematerailaization. It defined as movement
from the use of physical certificate into electronic form.
 Rocketing growth in stock market trading (72.3%) mid 1995 surge in
FI, inefficient settlement system
 It started in India on in 1996 with the introduction of Depository Act
 There are only two depositories , National Securities Depository
Ltd and the Central Depository Services Ltd.
 Demat account are opened with Depository Particiapant (DP)
 It can be used for financial assets: bonds, debentures

21. WHY DEMAT?
 Time saving (months to 4-5 days of transfer).
 Reduction of cost (no stamp duty)
 Liquidity of shares
 Globalization (increase in foreign investors)
 Paper works very rare.
 Transaction can be done anywhere

22. HOW TO BUY AND SELL SHARES
 This is done through professionals know as
stockbrokers.
 They buy and sell shares on investors behalf for a
commission called there brokerages.

23. FUTURE & SPOT INDEX
 An index future is a derivative, similar to a stock
future, whose value is dependent on the value of the
underlying, in this case, the index like the S&P CNX
Nifty or BSE Sensex
 Spot index is the current or today index. The price of
stock now.
 Future index is base on spot index and past data.

24. WRAP UP
 All indices including NIFTY and SENSEX are based on
speculations, estimates and averages of variables
which may or may not happen hence as financial
managers we must be cautious and exercise prudence
in making decisions with theses indices.

25. APPENDIX
 IISL - India Index Services and Products Ltd.
 CRISIL - Credit Rating and Information Services of India
Ltd
 S &P – Standard and Poor.
 NSE – National Stock Exchange
 BSE – Bombay Stock Exchange
 SEBI – Stock Exchange Board of India
 CNX – CRISIL NSE Index
