Days Range
Company | LTP | Change | Day Range |
|---|
Sector Name | Advances | No Change | Declined |
|---|
The Indian stock markets are widely judged by two major indexes, namely, Sensex and Nifty. But are they enough to solely represent the movement of the entire economy? Talking about Sensex, it tracks only the top 30 stocks as per market capitalization listed on the BSE. With the explosion of the Indian Stock Markets, the number of companies registered with BSE grew up to 3200 in March 1994.
Thus, the need arose for a robust stock index that contained a wider number of stocks from across various industries and could properly represent the exponentially growing constituents. As a result, 2 comprehensive indexes by the name BSE 200 and Dollex 200 (Dollar counterpart of BSE 200) were launched by the BSE in May 1994.
As the name suggests, S&P BSE 200 consists of 200 stocks ranked on the basis of market capitalization and trading volumes on the BSE (formerly the Bombay Stock Exchange). The BSE 200 index reflects the float-adjusted market capitalization of these companies. The value of the index changes with the change in the BSE 200 share price.
Unlike Sensex, which only reflects the price movement of the heavyweights from different segments, BSE 200 provides a broader view of the market and reflects the Indian Economy more appropriately. Together, these companies account for almost 80-85% of the total market cap of BSE. As a result, the movements in the S&P BSE 200 index can help investors predict the future of the Indian economy.
The BSE 200 stocks list is calculated on a float-adjusted market capitalization basis. But, what does float-adjusted mean? A float-adjusted market cap includes the value of only those shares that are readily available in the market for trading. This means that shares held by employees, promoters, government, etc., which are restricted from free trade, need to be excluded while calculating the index value.
The companies in BSE 200 are added or deleted twice every year in June and December. Here are the criteria that every index constituent should possess to be considered:
The free-float market capitalization of BSE 200 can be simply calculated by multiplying the float factor and the total market cap of the company, i.e., the percentage of total shares available for free trading in the stock markets.
For Ex: Company Y has issued a total number of 10 lakh shares in the market. Out of these, only 60% of shares are free for trade, without restriction, on the stock exchange. Assuming the market price of the share to be INR 1000, this is how its value on S&P BSE 200 will be calculated.
| Total Shares in Market for Company Y | A | 10 lakhs |
| Market Price per share of Company Y | B | INR 1000 |
| Total Market Capitalization | C = A*B | INR 100 Crores |
| Free-float factor (60%) | D | 0.6 |
| Free-Float Market Capitalization | E = C*D | INR 60 Crores |
To calculate the value of BSE 200, the free-float market capitalization of all the 200 companies is added. Then the value is adjusted with the base index value of 1989-90. So, the formula becomes,
| BSE 200 Share Price = Total Free-Float Market Capitalization x Base Index Value (1989-90)
Base Market Capitalization (1989-90) |
The constituents of BSE 200 are changed twice every year, i.e., in June and December. The constituents of the index are decided based on average free-float market capitalization and average traded value during the last 6 months.