What is a Stock Exchange Stock exchange is that place

where trading of shares is . of sale and done in terms purchase.

NSE: National Stock Exchange

The National Stock Exchange (NSE), located in Bombay, is India's first debt market. It was set up in 1993 to encourage stock exchange reform through system modernization and competition. It opened for trading in mid-1994. It was accorded recognition as a stock exchange by the Department of Company Affairs. The instruments traded are securities, treasury bills, government security bonds issued by public sector companies, derivatives etc.

NSE
NSE is the market leader in securities trading in India It is 16th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around US$985 billion and over 1,640 listings as of December 2011.

Contd.
NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities.

HOW ARE INDICES OF NIFTY CALCULATED???

NIFTY has been calculated since 1996 and initially it was calculated based on the Total Market Capitalization methodology and the methodology was changed in June 2009 to Free Float Market Capitalization. Hence, these days, the NIFTY is based on the Free Floating Market cap of 50 NIFTY stocks traded on the NSE relative to the base value which is

Free Float Market Capitalization??

The value of all the shares available for public trading excluding the promoter equity, holdings through FDI Route, Holdings by private corporate, and holdings by Employee Welfare Funds.

Importants of free flow market cap.

1. It depicts the market more rationally 2. It removes undue influence of government or promoter share holding, there by giving the equal opportunity for companies to be in the SENSEX 3. Almost all the Indices world over are calculated by this methodology 4. It gives Fund managers more authentic information for benchmark

NIFTY is calculated using the "Free-float Market Capitalization" methodology, wherein, the level of index at any point of time reflects the free-float market It reflects value of 50 component stocks relative to a base period.

The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company.
This market capitalization is further multiplied by the free-float factor to

How NIFTY is calculated?

The formula for calculating the NIFTY= (Sum of free flow market cap of 50 benchmark stocks)*Index Factor where, Index Factor = 1000/Market Cap Value in 1995. 1000 is the Index value during 1995.

Market Capitalization is the total worth of the outstanding (issued ) shares of the company it represents the total worth of the company Market Capitalization = Share Price * Total Shares

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. Then "free-Floating

(300*100+500*200) = 30000+100000

= Rs. 130000
Assume Market Cap during the year 1995 was Rs.25000 Then NIFTY = 130000*1000/25000 = 5200.

NSE NIFTY index milestones / records

Date of Milestone Nifty Index Value (points) 9-Feb-2012---------------5412 11-December-2007----6000 27-September-2007---5000 01-December-2006----4000 30-January-2006-------3000 09-January-2004-------2000 09-March-1992---------1000

NSE NIFTY index companies and Industry / Sector

Name of Company Industry / Sector ACC Ltd---------Cement Ambuja Cements---Cement Axis Bank-------Banks Bajaj Auto------Automobiles BHEL-------------Electrical BPCL--------------Refinery Bharti Airtel----Telecom Cairn India-----Oil exploration Cipla-------------Pharmaceutical DLF---------------Construction

NSE Nifty biggest falls / crashes

Date of Nifty Crash 21-January-2008---------496 22-January-2008---------310 18-May-2006--------------496 17-December-2007------271