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How is SENSEX points calculated? |
How is SENSEX points calculated? SENSEX is calculated using a "Market Capitalization-Weighted" methodology. As per this methodology, the level of index at any point of time reflects the total market value of 30 component stocks relative to a base period. (The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company). An index of a set of a combined variables (such as price and number of shares) is commonly referred as a 'Composite Index' by statisticians. A single indexed number is used to represent the results of this calculation in order to make the value easier to work with and track over time. It is much easier to graph a chart based on indexed values than one based on actual values. The base period of SENSEX is 1978-79. The actual total market value of the stocks in the Index during the base period has been set equal to an indexed value of 100. This is often indicated by the notation 1978-79=100. The formula used to calculate the Index is fairly straightforward. However, the calculation of the adjustments to the Index (commonly called Index maintenance) is more complex. The calculation of SENSEX involves dividing the total market capitalization of 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. It keeps the Index comparable over time and is the adjustment point for all Index maintenance adjustments. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate SENSEX every 15 seconds and disseminated in real time. Hey dude... you may find all your answers to your questions under the link... http://www.traderji.com/technical-analys... Cheers Amit Rao Sensex refers to the selected most active list of thirty shares having a certain weightage in the calculation of sensex figure in BSE. 0n the movements of price of these shares the upward and downward calculations are made and displayed. The list includes Reliance Group, Tata Steel, SBI, Infosys, TCS, 0NGC, Maruti, Bharti etc. and every movement in these sensitive shares, the sensex moves in line. If any of these go up or down, the sensex responds accordingly. |
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