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Wednesday, June 23, 2010

BSE 100 Index

As BSE Sensex has only 30 scrips, a need was felt for a more broad-based index, which could also reflect the movement of stock prices on a national scale. In 1989, Bombay Stock Exchange Limited, started compilation and publication of an index series called "BSE National Index". The BSE National Index is now known as BSE 100 and since April 5, 2004 it is calculated on the basis of free-float market capitalization methodology.

The equity shares of 100 companies from the "Specified" and the "Non-Specified" list of the five major stock exchanges, viz. Mumbai, Calcutta, Delhi, Ahmedabad and Madras have been selected for the purpose of compiling the BSE 100. The shares have been selected on the basis of market activity, due representation to various industry-groups and representation of trading activity on major stock exchanges. The financial year 1983-84 is the base year of BSE 100 Index because of the price stability during that year and its proximity to the index series. The base value has been fixed at 100 points.

Scrip Selection Criteria for BSE 100 Index

Trading Frequency: The scrip should have been traded for at least 95% of the trading days in the last three months. There can be exceptions in case of extreme reasons like scrip suspension etc.

Final Rank: The scrip should rank among the top 200 companies listed by final rank. For the purpose of calculation of final rank, 75% weightage is assigned to the rank obtained on the basis of three-month average full market capitalization and 25% weightage to the liquidity rank based on three-month average daily turnover & three-month average impact cost.

Industry/Sector Representation: Scrip is generally selected taking into account a balanced sectoral representation of the listed companies in the BSE.

Track Record: The company should have an acceptable track record.