Sensex And Nifty Definition
Sensex Full Form: Are you looking to know about What is Sensex and Nifty so in this article you can easily understand about Sensex Meaning and Full Form of Nifty. I have covered
What is the Sensex and how it is calculated
Different points between Nifty and Sensex
What is Free Float Market Capitalization
Past Performance of Nifty And Sensex
What does the Index Mean? Index definition is “An index is a statistical aggregate that changes measurements.” Recall this throughout this post–’ statistical aggregate.’ Not all indexes are the same–they can be differentiated on the basis of countries, the stock market cap they cover, or even how any stock becomes part of the index. Sometimes I feel that even building an index is an art and not science Sensex & Nifty are both big cap indexes but BSE NSE from various inventory exchanges.
What is Sensex?
Sensitivity Index is the Full Form Of Sensex.
When the Sensex comes up, people are pleased and angry when it comes down.
Sensex is the Bombay Stock Exchange or BSE stock market index – it is also known as BSE Sensex.
What does Sensex Mean
It is the market-weighted stock index of 30 firms chosen based on economic soundness and results. Usually big and well-established firms are selected to represent the different industries. Here is the list of Top 30 Companies in Sensex India
1. Housing Development Finance Corporation Ltd.
3. State Bank Of India
4. Adani Ports and Special Economic Zone Ltd.
5. Asian Paints Ltd.
6. Bajaj Auto Ltd
7. Bharti Airtel Ltd.
8. Coal India Ltd.
9. Dr. Reddys Laboratories Ltd.
10.Hero MotoCorp Ltd
11. Hindustan Unilever Ltd.
12. Hindustan Unilever Ltd.
There are many more remaining companies in Sensex which was first published in 1986. Sensex’s base value is 100 and its foundation year is 1978-79.
Full market Capitalisation of Sensex in Aug 2019 is 6,729,251.20 crores and free float is 3,740,148.93 crores
Over the years, how did the Sensex perform?
Here’s a chart showing Sensex’s value from the beginning –
How is the calculation of Sensex?
Using the Free-float market capitalization technique, the Sensex is calculated. The index represents the free-float market value of the 30 constituent stocks in relation to a base period in this technique.
What is Free Float Market Capitalization?
Free float stands for trading open shares. Not all shares may float freely. Some may be promised, some may be in the hands of individuals or bodies that control interest/promoters, some may be public holdings, etc. Such locked-in stocks are not regarded as floating freely.
To discover a company’s Free-Float Capitalization, first discover its market cap, the number of exceptional stocks multiplied by share price, and then multiply its free-float factor. The proportion of floated stocks to excellent determines the free-float factor. For instance, if a company has a float of 10 million shares and 12 million outstanding shares, the float to outstanding percentage is 83 percent. A business with a free float of 83 percent falls in the free-float factor of 80 to 85 percent, or 0.85, which is multiplied by its market cap. Twelve million shares multiplied by 10 dollars per share, then multiplied by 0.85 equals 102 million dollars in free-float capitalization.
What do you mean by Market Capitalization?
Market capitalization is the combined value of all the stocks in the stock exchange of separate businesses.
A company’s market capitalization is achieved by the product of its stock price and the amount of the company’s issued shares.
To determine the free-float market capitalization, this figure is multiplied by the free-float factor. The free float factor is obtained from the data the free-floating shares are submitted by each business. Every business must provide the data in a format provided by BSE on a quarterly basis.
All companies ‘ free-float market capitalization is summed up.
In order to get the Sensex value, the free-float market capitalization is then divided by an index divisor. This divisor is adjusting for stock modifications and other corporate shares. The divisor is the base year value of the Sensex Index.
How Does Sensex work -In the following example describes the working methodology of Sensex
Suppose there are two companies in the Index -A and B
Company A has 1000 stocks out of 600 are float freely or are accessible to purchase and sell to the general public.TEach Stock cost is Rs 100
Company A has 1500 stocks out of 800 are float freely or are accessible to purchase and sell to the general public.TEach Stock cost is Rs 120
Market Capital of Company A is 100000
Market Capital of Company B is 1200000
Free Float Factor of Company A is 0.60
Free Float Factor of Company B is 0.53
Total free-float market Capitalization of index =(100000*0.60+1200000*0.53)=696000
let us assume the base year of the index was 10000
value of the index is (696000/10000)*100=6960
Since India opened its economy in 1991, the BSE Sensex has witnessed enormous development. Growth occurred primarily in the 21st century, rising from a close of 3,377.28 in 2002 to a high of 20,286.99 in 2007 in August 2018. Growth happened primarily on the back of development in India’s gross national product (GDP) since the turn of the century, which ranks among the world’s fastest.
What is Nifty
India’s leading stock exchange is the National Stock Exchange (NSE). NIFTY’s Full Form is “National Stock Exchange Fifty,” the wide NSE index. NIFTY usually consists of 50 stocks, but 51 stocks are currently in existence. It’s called NIFTY 50 or Nifty CNX. India Index Services and Products Ltd. (IISL) owns and manages it.
The Nifty index base period is November 3, 1995.
The index’s base value was laid at 1000 and a
Rs 2.06 trillion base capital.
Which Firms belong to the NIFTY 50?
For businesses that have to be met, there are certain eligibility criteria–
Liquidity –The inventory should have traded at an average impact price of 0.50 percent or less over the past six months, for 90 percent of Rs. 2 crores portfolio observations.
Float adjustment–Companies must have at least twice the float-adjusted market capitalization of anything that constitutes the present lowest index constituent.
Domicile: The firm should be headquartered in India and trading on the NSE.
How has the NIFTY gone through the years?
The Graph of Nifty Past Performance –
NIFTY 50 is calculated using a free-float market capitalization-weighted method in
which the index level reflects the total market value of
all the stocks in the index relative to a given base period.
Here is the mathematical formula for NIFTY – market capitalization = equity capital x price free-float market capitalization = equity capital x price.
Index Value = Current Market Value / Base Market Capital x Base Index Value (1000)