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    Methodology For Calculating Sensex and Nifty 1

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    naresh
    The document discusses the methodology used to calculate the Sensex and Nifty indices in India. The Sensex is calculated based on the free-float market capitalization of 30 major companies listed on the Bombay Stock Exchange. Free-float market capitalization considers only the shares available for public trading by excluding shares held by promoters, governments, or trusts. A similar methodology is used to calculate the Nifty, which tracks the 50 most liquid stocks traded on the National Stock Exchange. Both indices are calculated by summing the free-float market capitalizations of constituent stocks and applying an index factor normalized to a base year.

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    Methodology For Calculating Sensex and Nifty 1

    Uploaded by

    naresh
    20 views3 pages
    The document discusses the methodology used to calculate the Sensex and Nifty indices in India. The Sensex is calculated based on the free-float market capitalization of 30 major companies listed on the Bombay Stock Exchange. Free-float market capitalization considers only the shares available for public trading by excluding shares held by promoters, governments, or trusts. A similar methodology is used to calculate the Nifty, which tracks the 50 most liquid stocks traded on the National Stock Exchange. Both indices are calculated by summing the free-float market capitalizations of constituent stocks and applying an index factor normalized to a base year.

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    Methodology for Calculating Sensex and Nifty

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    Methodology for Calculating Sensex and Nifty 1

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    The document discusses the methodology used to calculate the Sensex and Nifty indices in India. The Sensex is calculated based on the free-float market capitalization of 30 major companies listed on the Bombay Stock Exchange. Free-float market capitalization considers only the shares available for public trading by excluding shares held by promoters, governments, or trusts. A similar methodology is used to calculate the Nifty, which tracks the 50 most liquid stocks traded on the National Stock Exchange. Both indices are calculated by summing the free-float market capitalizations of constituent stocks and applying an index factor normalized to a base year.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    20 views3 pages

    Methodology For Calculating Sensex and Nifty 1

    Uploaded by

    naresh
    The document discusses the methodology used to calculate the Sensex and Nifty indices in India. The Sensex is calculated based on the free-float market capitalization of 30 major companies listed on the Bombay Stock Exchange. Free-float market capitalization considers only the shares available for public trading by excluding shares held by promoters, governments, or trusts. A similar methodology is used to calculate the Nifty, which tracks the 50 most liquid stocks traded on the National Stock Exchange. Both indices are calculated by summing the free-float market capitalizations of constituent stocks and applying an index factor normalized to a base year.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 3

    NVESTMENT MANAGEMENT

    METHODOLOGY FOR
    CALCULATING
    SENSEX AND NIFTY

    DONE BY,
    14-CO-329
    R.NARESH KUMAR
    METHODOLOGY FOR CALCULATING SENSEX AND
    The Sensex and Nifty are "indicesNIFTY
    of a stock market". There are many other
    indices other than these indices.
    TheSensex is calculated takinginto considerationstock prices of 30 different
    companies listed on BSE. It is calculated using thefree-float market
    capitalization method.
    Market capitalization is a worth of company in terms of its shares. To find
    market capitalization of a company, we can simply multiply the price of share
    with total number of shares issued by the company.
    Market capitalization varies from one company to another.

    Thats the total number of shares available for the public to trade in the
    market. It excludes shares held by promoters, governments or trusts, FDIs
    etc..
    To find the free float market value, the total value of the company (total
    shares x market price) is further multiplied by a free float market value
    factor, which is nothing but the percentage of free float shares of a
    particular company.
    So logically, the company which has more public holding will have the highest
    free float factor in the Sensex. This equalizes everything.
    Formula to calculate Sensex = (Sum of free float market cap of 30
    benchmark stocks)*Index Factor

    Index Factor = 100/Market Cap Value in 1978-79.


    100 is the Index value during 1978-79.

    Free float Market capital = No of shares available for public to trade *


    Market price of a share

    Similarly, Nifty is the benchmark index of NSE (National Stock Exchange).


    Nifty is made up of 50 stocks.

    Formula to calculate Nifty = (Sum of free float market cap of 50


    benchmark stocks)*Index Factor

    Index factor = 1000/Market Cap Value in the year 1995.

    1000 is the market capital value for the year 1995


    Base year for Nifty calculation is 1995.

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