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INTRODUCTION:
STOCK EXCHANGE
A stock exchange can be defined as a centralized market for
buying and selling stocks where the price is determined
through supply-demand mechanism.
Their usefulness:
Indices help to recognize broad trends in the market.
The investor can use the indices to allocate the funds
rationally among the stocks.
Technical analysts use these indices to predict the future
market.
Indices function as a status report on the general
economy.
CRITERIA FOR SELECTING STOCKS TO CALCULATE
INDEX
Listing history: The company should have listing history on
BSE for at least one year
Track record: The company should have listing history
Market capitalization: Company should have one among 100
market capitalizations of BSE, And each company should
have more than0.5% of total market capitalization of BSE
INDEX
Frequency of trading: Company stocks should be traded on
each and every trading day for the last one year
Industrial representation: Company Should be a leader in
the industry it represents
Market Capitalization
Market capitalization is the total worth of all outstanding
(issued) shares of a company. It represents the total worth
of a company.
Market capitalization=
No of shares outstanding x market price of share
Here;
Total Shares = 10000
Shares Held by Government = 2000
Shares Held by Directors = 5000
Shares available in the Open Market = 3000
Market price of share = Rs 100
Here;
Sum of free float market cap of company X and company
Y is 500000+100000 = 600000
Assume market cap during 1978-79 is 500000
NIFTY =
(Sum of free flow market cap of 50 major
stocks of NSE) X
Index value in 1995 / market cap value in
1995.
BOMBAY STOCK EXCHANGE BSE
Bombay Stock Exchange is the oldest stock
exchange in Asia with a rich heritage of over 133
years of existence.
BSE is the first stock exchange in the country
which obtained permanent recognition (in 1956)
from the Government of India under the Securities
Contracts (Regulation) Act (SCRA) 1956.
Over the past 133 years, BSE has facilitated the
growth of the Indian corporate sector by providing
it with cost and time efficient access to resources.
SENSEX (BSE30)
The BSE SENSEX, also called the BSE 30 or simply the SENSEX, is a free-float
market capitalization weighted stock market index of 30 well-established and
financially sound companies listed on Bombay Stock Exchange.
The 30 component companies which are some of the largest and most actively
traded stocks, are representative of various industrial sectors of the Indian
economy. Published since January 1, 1986, the SENSEX is regarded as the pulse
of the domestic stock markets in India.
The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year
as 1978-79.
On 25 July, 2001 BSE launched DOLLEX-30, a dollar-linked version of SENSEX.
As of 21 April 2011, the market capitalization of SENSEX was about 29,733 billion
(US$538 billion) (42.34% of market capitalization of BSE), while its free-float
market capitalization was 15,690 billion (US$284 billion).
Presently the following are the
constituent companies:
ACC, Infosys, ICICI Bank, Dr. Reddys
Lab, SBI, CIPLA, Zee Telefilms, Nestle
India, RPL, RIL, HCL Tech., Bajaj Auto,
BHEL, Castrol, BSES, Colgate Palmolive,
Hindalco, Grasim, Glaxo, Hero Honda,
Gujarat Ambuja Cements, HLL, HPCL,
ITC, L&T, MTNL, Ranbaxy, TISCO, TELCO
and Satyam.
BSE INDICES
BSE 100
BSE 200
BSE IPO