Introduction

Weighted Average of selected stocks Broad Outline of the market movement

Barometer Measuring the value of a section of the stock market SENSEX, NIFTY, BSE200, BSE-500 etc..

Need for stock Indices

Trend Identifier

Benchmark for Investors

Status report of the general economy

Allocation of funds rationally

Not practical to measure all the listed shares performance

Well known Indices in India

BSE-SENSEX, BSE100,BSE-200, BSE500, BSE-Midcap BSE-Smallcap BSE-Tech BSEBankex BSE-Auto etc.

NIFTY S&P CNX Nifty SGX Nifty

MCX-SX-40

Methods of computing Indices

Price Weighted Index

Market-Cap Weighted Index

NIFTY
50 stocks index

Base year 1995 24 sectors

National 50

Base Value=1000

Introduced by NSE

SENSEX
30 stocks

Represents 13 sectors

Sensitivity Index

Base Year 1st April 1979 Base Value 100

Introduced by BSE

Criteria to be listed in Indices

Equities Listed on BSE except Z group etc. Minimum three months Traded everyday

Reported revenues of last four quarters 75 top companies are selected Ranked on absolute turnover

Sorted by free float market capitalization Industry sector representation Selected in SENSEX

Recap

Listing History

Trading Frequency

Top 100 in market capitalization

Market Capitalization weight

Industry/sector

History Record

How are they constructed

Assume

Only 2 shares Market Cap Rs.25,000/-

SBI RIL

500 shares, 200 held by government and 300 publicly trading Price= Rs.100/-

1000 shares, 500 held by promoters and 500 publicly traded Price= Rs.200/-

SENSEX
300*100 500*200 Rs.13,000/-

13,000*100/25000 =520

Global Indices
Dow Jones Global Indexes

95% of market cap of developed and emerging economy 5500 companies around the world

S&P Global 500

31 countries and 70% of global stock market cap GICS- All ten Global Industry Classification Standard

MSCI World

Morgan Stanley Capital International 1606 world stocks