Computation of SENSEX

Bombay Stock Exchange

SENSEX - The Barometer

of Indian Capital Markets

Introduction
Computation of Sensex

SENSEX
SENSEX was first compiled in 1986
BSE Chairman: Shri G.N. Bajpai,
It was compiled on "Market Capitalization
Weighted
"
(full-market
capitalization)
methodology(30 component stocks representing large,
well-established and financially sound companies across
key sectors).
Market Capitalization = (No of shares issued by the
company )* (Current Market Price)

Since September 1, 2003, SENSEX is being

calculated on a free-float market capitalization
methodology.

Full and Free Float Market

Capitalization

Under the 'full-market capitalization' methodology, the total

market capitalization of a company, irrespective of who is
holding the shares, is taken into consideration for computation
of an index.
However, if instead of taking the total market capitalization, only the Freefloat market capitalization of a company is considered for index calculation, it
is called the Free-float methodology.

Free-float market capitalization is defined as that proportion of

total shares issued by the company which are readily available
for trading in the market.

Free Float Method

The below given shares will not come under Free Float
Method

Shares held by founders/directors/ acquirers (which has control element)

Shares held by persons/ bodies with "Controlling Interest"

Shares held by Government as promoter/acquirer

Holdings through the FDI Route

Strategic stakes by private corporate bodies/ individuals

Equity held by associate/group companies (cross-holdings)

Locked-in shares and shares which would not be sold in the open market
in normal course.

The remaining shareholders fall under the Free-float

category.

Free Float Market Capitalization

The "free-float market capitalization-weighted"
methodology
is
a
widely
followed
index
construction methodology on which majority of
global equity indices are based; all major index
providers like MSCI, FTSE, S&P and Dow Jones use
the free-float methodology.
MSCI acronym stands for Morgan Stanley
Capital International Europe
FTSE - Financial Times Stock Exchange, UK

Index Specification
Base Year

1978-79

Base Index Value

100

Date of Launch

01/01/1986

Method of calculation

Number of scrips

Launched on full market

capitalization method and
effective September 01, 2003,
calculation method shifted to
free-float market capitalization.
30

Index calculation frequency

Real Time

SENSEX Calculation
Methodology
SENSEX is calculated using the "Free-float Market
Capitalization" methodology, where the level of index at
any point of time reflects the free-float market value of
30 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 determine the free-float market capitalization.

SENSEX Calculation
SENSEX:
The formula for calculating the Sensex is

Sensex = sum of free flow market

capitalization for 30 stocks * Index factor
Free-Float Market Capitalization = Market Capitalization * Free Float Factor
Market Capitalization = (No of shares issued by the company )* (Current Market Price)
Index Factor = Base Index Value in 1978-79/Market capitalization value in 1978-79
(Base Index Value = 100) ( Base Market Capitalization = 8285)
SENSEX = 1427209.86X 0.0122 = 17411
SENSEX = 1414225.41*0.0122 = 17226
*** BSE has designed a Free-float format, which is filled and submitted by all index
companies on a quarterly basis. (Format available on
http://www.bseindia.com/about/downloads.asp ) BSE determines the Free-float factor
for each company based on the detailed information submitted by the companies in
the prescribed format.
In order for BSE to track the free-float of company on a regular basis, Companies are
requested to file the forms with BSE for each quarter of the year within 15 days of
each quarter ending.

NIFTY Calculation
NSE:
The formula for calculating the Nifty is
NIFTY = sum of free flow market capitalization for 50
stocks * Index factor
Free-Float Market Capitalization = Market Capitalization * Free Float
Factor
Market Capitalization = (No of shares issued by the company )*
(Current Market Price)
Index Factor = Base Index Value in 1995/Market capitalization value in
1995
(Base Index Value = 1000)

Scripwise Weightages in SENSEX

Scripwise Weightages in SENSEX

BSE SENSEX Live Streamer

http://www.bseindia.com/strea
mer.htm

1.

SENSEX - Scrip Selection

Criteria

Equities of companies listed on Bombay Stock Exchange Ltd. (excluding companies

classified in Z group, listed mutual funds, scrips suspended on the last day of the
month prior to review date, scrips objected by the Surveillance department of the
Exchange and those that are traded under permitted category) shall be considered
eligible

2.

Listing History: The scrip should have a listing history of at least three months at
BSE. An exception may be granted to one month, if the average free-float market
capitalization of a newly listed company ranks in the top 10 of all companies listed at
BSE. In the event that a company is listed on account of a merger / demerger /
amalgamation, a minimum listing history is not required.

3.

The scrip should have been traded on each and every trading day in the last three
months at BSE. Exceptions can be made for extreme reasons like scrip suspension etc.

4.

Companies that have reported revenue in the latest four quarters from its core
activity are considered eligible.

5.

From the list of constituents selected through Steps 1-4, the top 75 companies based
on free-float market capitalisation (avg. 3 months) are selected as well as any
additional companies that are in the top 75 based on full market capitalization (avg. 3
months).

6.

The filtered list of constituents selected through Step 5 (which can be greater than
75 companies) is then ranked on absolute turnover (avg. 3 months).

SENSEX - Scrip Selection

Criteria
7. Any company in the filtered, sorted list created in Step 6 that
has Cumulative Turnover of >98%, are excluded, so long as the
remaining list has more than 30 scrips.
8.

The filtered list calculated in Step 7 is then sorted by free

float market capitalization. Any company having a weight
within this filtered constituent list of <0.50% shall be excluded

9.

All remaining companies will be sorted on sector and subsorted in the descending order of rank on free-float market
capitalization.

10. Industry/Sector Representation: Scrip selection will generally

attempt to maintain index sectoral weights that are broadly inline with the overall market.
11. Track Record: In the opinion of the BSE Index Committee, all
companies included within the SENSEX should have an
acceptable track record.