What is Nifty 50 and Sensex?
Sensex was launched in 1986 by BSE and Nifty 50 was launched on 22 April in 1996. Nifty 50 and Sensex are the indices of India. Nifty 50 represents the top 50 companies of India listed on NSE and Sensex shows represent the top 30 companies of India on BSE. Indices represent the country's stock markets. Almost every having a portfolio in the same market of indices can compare their portfolio returns with indices and even mutual also compare their fund returns with indices.
How to Nifty is calculated?
Step 1: Calculate IWF(Investible Weight Factors)
IWF is a unit of floating stock available for trading. IWF is total shares minus (addition of shareholding of the promoter, government holding in the capacity o strategic investor, shares held by promoters through ADR/GDRs, cross-holdings by associates or group companies, Employee Welfare Trust and Shares under lock-in category) and the answer is then divided by total shares. For this, an example is given below.
Step 2: Calculate Market Capitalization
Market Capitalization shows the worth of a company based on its share price. Market Capitalization is a product of Shares Outstanding by Share Price
Market Capitalization = Shares Outstanding * Share Price
Also Read:
Step 3: Calculate Free Float Market Capitalization
Free Float Market Capitalization is a product of IWF, Share Price & Shares Outstanding.
Free Float Market Capitalization = IWF * Share Price * Shares Outstanding
Step 4: Calculate Index Value
Index Value is Current Market Value divided by Base Market Capital and the value is multiplied by Base Index Value which is 1000.
(Current Market Value / Base Market Capital) * (Base Index Value) {1000}
The aggregate market capitalization of each scrip in the Index during the base period is base market capital of the Index. The market capitalization during the base period is equated to an Index value of 1000 known as the base Index value.
The Nifty 50
Comments
Post a Comment