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Wednesday, June 23, 2010

BSE 500 Index

On August 9, 1999, Bombay Stock Exchange constructed a new index, namely, BSE-500, consisting of 500 scrips in its basket. BSE-500 index represents nearly 93% of the total market capitalisation on Bombay Stock Exchange Limited.

BSE 500 represents all 20 major industries of the economy. It reflects the changing pattern of the economy and that of the market. The BSE-500 index was initially calculated on a full market capitalization methodology. Since August 16, 2005, the index is computed on a free-float methodology in line with sensex.

Year 1998-99 has been chosen as the base year, and February 1, 1999 has been selected as the base date for its proximity to the current period. The base value has been fixed at 1000 points in order to keep the index comparable with other similar indices.

Scrip Selection Criteria for BSE 500 Index

Trading Frequency: The scrip should have been traded for at least 75% 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 750 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.