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S & P,CNX,NIFTY And BSE
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What is a Stock
Exchange?
Stock exchange is that placewhere trading of shares is donein terms of sale and purchase.
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BSE: The Bombay StockExchange
•
There are 23 stockexchanges in the India.Bombay Stock Exchangeis the largest, with over 6,stocks listed. The BSEacco!nts "or over two thirds o"the total trading vol!me in theco!ntry.
• Established in #$%&, theexchange is also the oldest in
'sia. 'mong the twenty(twoStock Exchanges recogni)edby the *overnment o" India!nder the Sec!rities +ontracts-eg!lation 'ct, #/&6, it wasthe 0rst one to be recogni)edand it is the only one that had( 'shish
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Scrips at BSE
• '++• 'I-TE4
• B5E4
• 47
• *-'SI8
• *9:-'T '8B9:'
• 57+
• 57+ B';
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• It happens to be the first stock exchange in
Asia.• BSE possess the maximum number of listed
organizations in the world.
•
Nifty is the index of National Stock ExchangeNSE!. Both NSE and BSE are the most
popular stock exchanges in India.
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"ision and #ission of BSE
• Vision$ur %ision is to be the most sought after learning pro%ider in the world in areas of
financial and leadership learning& by pioneering the generation and dissemination of
knowledge for the enhancement of skills and capabilities of professionals and
aspiring professionals.
• Mission As a centre of learning& our mission is to promote an open learning en%ironment that
brings together people& cultures and ideas from around the world& changing li%es and
helping transform organizations through inno%ati%e learning programs.
'hrough our learning programs& we de%elop responsible& thoughtful leaders andentrepreneurs who create %alue for their organizations and their communities.
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Indices SE;SE@ ? ;I7T=
Stock !arket performance is"uanti#ed by calculating an index
using the benchmark scrips and asknown to all SE$SE% &Sensiti'e(ndex) is associated with Bombay
Stock Exchange and S*+ ,$% $(-Tis associated with $ational StockExchange
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5A '-E I;I+ES 7SE;SE@ '; ;I7T=+'4+94'TECCC
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5ow are the SE;SE@ 3Stocks are selectedC
• /isting 0istory
• Trading -re"uency
• 1ank based on the !arket ,ap &Should be2mong top 344)
• !arket ,apitali5ation weight
• (ndustry 6 sector they belong
• 0istorical 1ecord
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SE;SE@
• SE$SE% has been calculated since3789 and initially it was calculatedbased on the Total !arket,apitali5ation methodology and themethodology was changed in 44;to -ree -loat !arket ,apitali5ation.
•
0ence< these days< the SE$SE% isbased on the -ree -loating !arketcap of ;4 SE$SE% Stocks traded onthe BSE relati'e to the base 'alue
which is 344&37=8>=7) and it is
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SE;SE@ +'4+94'TI;8ET54*=
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• SE;SE@ is calc!lated !sing the D7ree(oat 8arket +a1itali)ationD
methodology, wherein, the level o"index at any 1oint o" time reects the"ree(oat market
• It reects val!e o" 3 com1onentstocks relative to a base 1eriod.
•
The market ca1itali)ation o" acom1any is determined by m!lti1lyingthe 1rice o" its stock by the n!mber o"shares iss!ed by the com1any.
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5ow SE;SE@ iscalc!latedC
The "orm!la "or calc!lating theSE;SE@ F S!m o" "ree ow market
ca1 o" 3 benchmark stocksGIndex7actor
where,
Index 7actor F #H8arket +a1al!e in #/%$(%/. # is the Index val!e d!ring #/%$(%/.
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Exam1le
'ss!me SE;SE@ has only 2 stocksnamely SBI and -E4I';+E. Totalshares in SBI are & o!t o" which
2 are held by *overnment and only3 are available "or 1!blic trading.-E4I';+E has # shares o!t o"which & are held by 1romoters and& are available "or trading. 'ss!me1rice o" SBI Stock is -s.# and-eliance is -s.2. Then D"ree(
7loating 8arket +a1D o" these 2com anies F
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3G#J&G2 F3J# F -s. #3
'ss!me 8arket +a1 d!ring the year#/%$(%/ was -s.2&
Then SE;SE@ F #3G#H2& F&2.
The methodology in the exam1le is
exactly "ollowed to calc!late the
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Full form of S & P CNX NIFTY?
( )N* stands for )+ISI, NSE Indices.
( )N* ensures common branding of indices& to reflect the
identities of both the promoters& i.e. NSE and )+ISI,.
( 'hus& -)- stands for )+ISI,& -N- stands for NSE and * stands
for Exchange or Index.
( 'he S/ prefix belongs to the 0S1based Standard /oor-s2inancial Information Ser%ices.
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;I7T=
The ;ational Stock Exchange ;SEis associated with ;I7T= and it is also
calc!lated by the same methodologyb!t with two key diKerences.
#. Base year is #//& and base val!e
is #.2. ;I7T= is calc!lated based on &stocks.
Everything else remains the same in
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Bene0ts to Investor
#. 4iL!idity o" theinvestment is increased
2. The sec!rities dealt on astock exchange are goodcollateral sec!rity "or loans.
3. The stock exchangesa"eg!ards interests o"investors thro!gh strict
en"orcement o" r!les and
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Bene0ts to the com1any
#. ' com1any whose shares L!oted onstock exchange they enMoy betterre1!tation and credit.
2. The market "or the shares o" s!ch acom1any is nat!rally widened.
3. The market 1rice o" sec!rities islikely to be higher in relation to its
earnings, dividends and 1ro1ertyval!es. This raises the bargaining1ower o" the com1any in the event o"a takeover, merger or amalgamation.
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+isk 2actors
• +isk factors are the same associated
with any of the stock exchange in the
world. #arkets can turn %olatile at
any point of time
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':9ST8E;TS 7-
B;9S, -I*5TS ';;EA4= ISS9E +'>IT'4
+eliance /ower $3s bonus share issue
'dM t t " B
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'dM!stment "or Bon!s,-ights and ;ewly Iss!ed
+a1ital
• SE;SE@ calc!lation needs to beadM!sted "or iss!e o" Bon!s or -ightsshares, I" no adM!stments are made, adiscontin!ity wo!ld arise between thec!rrent val!e o" the index and its1revio!s val!e des1ite the non(
occ!rrence o" any economic activity o"s!bstance
• 't the BSE Index +ell , the base val!e is
adM!sted, which is !sed to alter market
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Bibliography
http455e6uityahead.in5wp1content5uploads578995995nifty1weekly
http455mohdarafat.com5tag5nifty1le%els5
http455in.reuters.com5article5788:58757;5idINIndia1788:877;
http455www.topnews.in5sensex1sheds17?81pts1morning1trade17
http455en.wikipedia.org5wiki5S7=/)N*Nifty
http455en.wikipedia.org5wiki5BombayStockExchange
http455www.moneymunch.com5what1is1nifty1bees1niftybees5
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