# Sensex and Nifty calculation simplified

CA Chiranjiv Kumar , 05 November 2013

Have you ever wondered what the SENSEX and NIFTY is? How are they calculated?

SENSEX i.e. Sensitive Index is the benchmark index of Bombay Stock Exchange (BSE) composed of 30 of the largest and most actively-traded stocks of BSE.

Calculation Method

BSE uses Free-Float methodology (multiplying the number of shares of top 30 companies with their respective equity’s price excluding locked in shares i.e. the ones hold by promoters, government and those having controlling interest in the concern) to calculate the index. For e.g. A company has 2 promoters X and Y and shares held by them are 1000 and 2000 respectively and to take a loan 1500 shares has been issued to government as a collateral. So 1000+2000+1500=4500 shares will be taken as locked in securities and all other shares are used to calculate SENSEX. Now question arises what is the process. Here it is –

1.  Each company’s Market capitalization is determined (No. of shares x price)

2. Free float factor of company is determined by BSE. Free float factor (between 0.05-1.00) is a multiple by which company’s Market capitalization is multiplied to arrive at Free-float market capitalization. The factor is determined by details submitted by company. It is a kind of weightage given to companies. Say Capitalization is 36,00,000

3. Now Ratio and Proportion is used. How? Base index of 1978-79 is used. Index of 1978-79 is taken as 100. Say the Free-float market capitalization was 60,000 (may vary) at the time.

When the capitalization was 60,000 index was 100

When the capitalization is 36,00,000 index is 6000

So it means SENSEX is 6000

INDEX AS OF 20th SEPTEMBER 2013

 Company Name Company Name Company Name Bajaj Auto Ltd Hindustan Unilever Ltd Oil and Natural Gas Corporation Ltd Bharat Heavy Electricals Ltd Housing Development Finance Corporation Ltd Reliance Industries Ltd Bharti Airtel Ltd ICICI Bank Ltd Sesa Goa Ltd Cipla Ltd Infosys Ltd State Bank of India Coal India Ltd ITC Ltd Sun Pharmaceutical Industries Ltd Dr.Reddy's Laboratories Ltd Jindal Steel And Power Ltd Tata Consultancy Services Ltd GAIL (India) Ltd Larsen & Toubro Ltd Tata Motors Ltd HDFC Bank Ltd Mahindra and Mahindra Ltd Tata Power Company Ltd Hero MotoCorp Ltd Maruti Suzuki India Ltd Tata Steel Ltd Hindalco Industries Ltd NTPC Ltd Wipro Ltd

NIFTY i.e. National Stock Exchange Fifty is the benchmark index of National Stock Exchange (NSE) composed of 50 from of the largest and most actively-traded stocks of NSE. 50 Top stock are selected from 24 Sectors.

Calculation Method is just like BSE except the Base value is taken of year 1995 and is set to 1000 and base capital of Rs. 2.06 trillion is taken.

INDEX AS OF 20th SEPTEMBER 2013

 Company Name Industry Symbol ACC Ltd. CEMENT AND CEMENT PRODUCTS ACC Ambuja Cements Ltd. CEMENT AND CEMENT PRODUCTS AMBUJACEM Asian Paints Ltd. PAINTS ASIANPAINT Axis Bank Ltd. BANKS AXISBANK Bajaj Auto Ltd. AUTOMOBILES - 2 AND 3 WHEELERS BAJAJ-AUTO Bank of Baroda BANKS BANKBARODA Bharat Heavy Electricals Ltd. ELECTRICAL EQUIPMENT BHEL Bharat Petroleum Corporation Ltd. REFINERIES BPCL Bharti Airtel Ltd. TELECOMMUNICATION - SERVICES BHARTIARTL Cairn India Ltd. OIL EXPLORATION/PRODUCTION CAIRN Cipla Ltd. PHARMACEUTICALS CIPLA Coal India Ltd. MINING COALINDIA DLF Ltd. CONSTRUCTION DLF Dr. Reddy's Laboratories Ltd. PHARMACEUTICALS DRREDDY GAIL (India) Ltd. GAS GAIL Grasim Industries Ltd. CEMENT AND CEMENT PRODUCTS GRASIM HCL Technologies Ltd. COMPUTERS - SOFTWARE HCLTECH HDFC Bank Ltd. BANKS HDFCBANK Hero MotoCorp Ltd. AUTOMOBILES - 2 AND 3 WHEELERS HEROMOTOCO Hindalco Industries Ltd. ALUMINIUM HINDALCO Hindustan Unilever Ltd. DIVERSIFIED HINDUNILVR Housing Development Finance Corporation Ltd. FINANCE - HOUSING HDFC I T C Ltd. CIGARETTES ITC ICICI Bank Ltd. BANKS ICICIBANK IDFC Ltd. FINANCIAL INSTITUTION IDFC IndusInd Bank Ltd. BANKS INDUSINDBK Infosys Ltd. COMPUTERS - SOFTWARE INFY Jaiprakash Associates Ltd. CONSTRUCTION JPASSOCIAT Jindal Steel & Power Ltd. STEEL AND STEEL PRODUCTS JINDALSTEL Kotak Mahindra Bank Ltd. BANKS KOTAKBANK Larsen & Toubro Ltd. ENGINEERING LT Lupin Ltd. PHARMACEUTICALS LUPIN Mahindra & Mahindra Ltd. AUTOMOBILES - 4 WHEELERS M&M Maruti Suzuki India Ltd. AUTOMOBILES - 4 WHEELERS MARUTI NMDC Ltd. MINING NMDC NTPC Ltd. POWER NTPC Oil & Natural Gas Corporation Ltd. OIL EXPLORATION/PRODUCTION ONGC Power Grid Corporation of India Ltd. POWER POWERGRID Punjab National Bank BANKS PNB Ranbaxy Laboratories Ltd. PHARMACEUTICALS RANBAXY Reliance Industries Ltd. REFINERIES RELIANCE Reliance Infrastructure Ltd. POWER RELINFRA Sesa Goa Ltd. MINING SESAGOA State Bank of India BANKS SBIN Sun Pharmaceutical Industries Ltd. PHARMACEUTICALS SUNPHARMA Tata Consultancy Services Ltd. COMPUTERS - SOFTWARE TCS Tata Motors Ltd. AUTOMOBILES - 4 WHEELERS TATAMOTORS Tata Power Co. Ltd. POWER TATAPOWER Tata Steel Ltd. STEEL AND STEEL PRODUCTS TATASTEEL UltraTech Cement Ltd. CEMENT AND CEMENT PRODUCTS ULTRACEMCO

Chiranjiv Kumar

Owner of fundspedia.com

CA Chiranjiv Kumar
(www.chiranjivkumar.com)
Category Shares & Stock   Report

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