The formula for Stock Market Index Calculation is as follows.
Stock Market Index = A total of 30 selected companies Stock market share capitalized at current market price / The total market capitalization of the same companies at market price in the year 1978-79
History of Stock Market Index Calculation
The stock market index was first drawn in 1986. But the base year for this was 1978-79. Even this time, the market prices of only 30 reputed companies were used to calculate the stock market index. To calculate the capitalized value of the total share capital of the respective companies at the current market price, multiply the number of shares issued in each company’s share capital by the current market price of the same company.
The shares of all these companies are then subtracted at the current rate of capitalization and the number is taken as dividend in the above formula. The total capitalized value of the shares issued by the same companies at the rate of 1978-79 is the divisor in the above formula. As a result, the corresponding ratio of the current market capitalization of the respective 30 companies and the capitalized value of the same company at the same rate in 1978-79 is the stock market index.
In short, the total market capitalization of 30 companies at current market prices is many times the total market capitalization of the same companies at the rate of 1978-79.
As per the recent changes, the founders or promoters are not considering shareholding to calculate the above capitalized prices. – Only the remaining shares of the company concerned are taken. So now the stock market index is called Free Float Index.
List of Main Index in BSE & NSE
| BSE Index Names | NSE Index Names |
|---|---|
| S&P BSE SENSEX | NIFTY 50 |
| S&P BSE SENSEX 50 | NIFTY NEXT 50 |
| S&P BSE SENSEX Next 50 | NIFTY 100 |
| S&P BSE 100 | NIFTY 200 |
| S&P BSE Bharat 22 Index | NIFTY 500 |
| S&P BSE MidCap | NIFTY MIDCAP 50 |
| S&P BSE SmallCap | NIFTY MIDCAP 100 |
| S&P BSE 200 | NIFTY SMLCAP 100 |
| S&P BSE 150 MidCap Index | INDIA VIX |
| S&P BSE 250 SmallCap Index | NIFTY MIDCAP 150 |
| S&P BSE 250 LargeMidCap Index | NIFTY SMLCAP 50 |
| S&P BSE 400 MidSmallCap Index | NIFTY SMLCAP 250 |
| S&P BSE 500 | NIFTY MIDSML 400 |
| S&P BSE AllCap | |
| S&P BSE LargeCap | |
| S&P BSE SmallCap Select Index | |
| S&P BSE MidCap Select Index | |
| S&P BSE 100 LargeCap TMC Index |
Stock Market Index Eligible Criteria
Now which are these 30 companies? The names of these 30 companies are given below. But these companies have been selected on the condition that they should meet the following criteria
- Shares of the company concerned, preferably in ‘A’ class air.
- The company should declare dividend every year or Their previous performance should be a clear indication that the management of the company concerned is efficient and loyal.
- The shares of the company concerned should be traded in the stock market on a daily basis in the previous year. Quantum and price of this transaction should be in the shares of the top 150 companies in the stock market.
- At least 0.05% of the total share capital of the company concerned should be traded on a daily basis.
- When selecting companies for this group of 30 companies, attention is also paid to the fact that each section of the industry should be represented. The selected company is likely to be the leading company in that industry segment.
From this we can see that companies with good track record, market fluidity and representing different segments of the industry have been selected for the index.
List of BSE SENSEX-30 Index Companies
The names of these 30 companies and their industrial divisions are given below.
| Sr. No | COMPANY | INDUSTRY |
|---|---|---|
| 1 | ASIAN PAINTS | PAINTS |
| 2 | AXIS BANK | BANKING |
| 3 | BAJAJ AUTO | AUTO |
| 4 | BAJAJ FINANCE | FINANCE |
| 5 | BAJAJ FINSERV | FINANCE |
| 6 | BHARTI AIRTEL | TELECOM |
| 7 | HCL TECHNOLOGIES | SOFTWARE |
| 8 | HDFC | FIN. INSTITUTIONS |
| 9 | HDFC BANK | BANKING |
| 10 | HUL | FMCG |
| 11 | ICICI BANK | BANKING |
| 12 | INDUSIND BANK | BANKING |
| 13 | INFOSYS | SOFTWARE |
| 14 | ITC | FMCG |
| 15 | KOTAK MAHINDRA BANK | BANKING |
| 16 | L&T | ENGINEERING |
| 17 | M&M | AUTO |
| 18 | MARUTI SUZUKI | AUTO |
| 19 | NESTLE | FOOD BEVERAGES |
| 20 | NTPC | POWER |
| 21 | ONGC | ENERGY |
| 22 | POWER GRID | POWER |
| 23 | RELIANCE IND. | ENERGY |
| 24 | SBI | BANKING |
| 25 | SUN PHARMA | PHARMA |
| 26 | TATA STEEL | STEEL |
| 27 | TCS | SOFTWARE |
| 28 | TECH MAHINDRA | SOFTWARE |
| 29 | TITAN | CONSUMER DURABLES |
| 30 | ULTRATECH CEMENT | CEMENT |
Modifications may be made to the above companies. At the time of such change, the appropriate correction is made at the capitalized price of the original year 1978-79. This is how the National Stock Exchange (NSE) index is calculated. But for that, the selected capital figures of 50 selected companies are taken into account. This index is called Nifty.
Stock Market Buying / Selling Price Information-
Similarly, the opening and closing prices of each day of buying / selling as well as the highest and lowest prices are drawn for each company traded on the stock exchange. The closing price takes the average price of the last 15 minutes of the transaction.
The buying / selling prices of each share per minute and the starting and ending prices of the day are constantly announced day / night on BOLT as well as in the media. The index is also stated. This allows investors to get a lot of information even in a timely manner.
Conclusion
From the above discussion you may have got an idea of how to calculate the stock market price index. Now the question is, when did this work of indexing take place? The index is drawn every minute of the day during the trading hours of the stock market. For this, the price indexes revealed from the buying / selling in the stock market of the respective companies are immediately used for calculation. All this has been made possible by computerization.
Take a Look
