How NIFTY and BANK NIFTY is calculated?
This may help (https://www.nseindia.com/content/indices/nifty_freefloat_method_new.pdf)
(https://www.nseindia.com/products/content/equities/indices/nifty_50.htm)
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Bank Nifty represents the 12 most liquid and large capitalised stocks from the banking sector which trade on the National Stock Exchange (NSE).
NIFTY The National Stock Exchange (NSE) is associated with NIFTY andit is also calculated by the same methodology but with two keydifferences.1. Base year is 1995 and base value is 1000.2. NIFTY is calculated based on 50 stocks.Everything else remains the same in NIFTY Index calculation aswell.
Both are calculated
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How to calculate index
INDEX
A stock index or stock market index is a measurement of the value of a section of the stock market.
Stock market or share market is a market where buyer and seller meet together to make transaction. If a person purchases share it means, he is also owner of the company.
SENSEX
Sensex stands for sensitive index(BSE). Sensex indicates all major companies of BSE. Sensex is calculated using share prices of 30 major companies which are listed in BSE and by using base value 100 (1978-79). Sensex calculation is practiced since 1986
NIFTY
NIifty indicates nse. It consists 50 large companies.it is calculated using base year 1995 and base index value 1000.
Criteria for selecting stocks to calculate Index
Listing history: The Company should have listing history on BSE for at least one year.
Track record: company should have good track record.
Market capitalization: Company should be one among 100 market capitalizations of BSE, and each company should have more than 0.5% of total market capitalization of BSE index.
Frequency of trading: company stocks should be traded on each and every trading day for the last one year.
Industrial representation: company should be a leader in the industry it represents.
Market capitalization = No. Of outstading share * market price of the share.
Free float factor = No of shares available for trading in the open market / Total No of outstanding shares of the company.
Calculation of SENSEX and NIFTY
SENSEX = (sum of free float market cap of 30 major companies of BSE) X Index value in 1978-79 / Market cap value in 1978-79.
NIFTY = (Sum of free flow market cap of 50 major stocks of NSE) X Index value in 1995 / market cap value in 1995.
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To calculate Sensex
1)Sensex = 30 components
Market capitalization= price of stock *No of shares
Base Period of sensex is 1978-79 and the base value is 100
Formula to calculate sensex
SENSEX= (sum of free flow of market cap of 30 benchmark stocks )*index factor
INDEX FACTOR = 100/MARKET CAP VALUE IN 1978-79
For example
Assume Sensex has only two stocks
1)SBI
2)RELIANCE
Price of SBI =100 (SUPPOSE)
Suppose SBI Total shares= 500(200 is held by government and 300 is for public)
so ,300 is free float
Similarly ,
RELIANCE price = 2
RELIANCE Total share =1000 (500 is for government and 500 for public )
so ,Free float =500
now Free float
(300100+500200)=130000
Now suppose market cap for the year is = 250000
Then SENSEX = 130000*100/25000=520
To calculate Nifty
NIFTY = 50 STOCKS
Base year is 1995 and the base value is 1000
NIFTY = (Sum of free flow market cap of 50 major stocks of NSE) X Index value in 1995 / market cap value in 1995
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