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Showing posts with label Bombay Stock Exchange. Show all posts
Showing posts with label Bombay Stock Exchange. Show all posts

Sunday, August 15, 2010

What is a Stock Index?

A stock index is a compilation of stocks constructed in such a manor to track a particular market, sector, commodity, currency, bond, or other asset. For example, the Sensex is an index that tracks the largest 30 companies listed on the Bombay Stock Exchange.

What is in an Index?

The stocks in and index are collected in what’s known as a basket. For example, if you wanted to invest in the Sensex, you would purchase shares of the 30 stocks in the index basket. Similarly, in case of Nifty, you would purchase shares of the 50 stocks in the index basket.  You would actually own shares of 50 different companies if invested in Sensex and shares of 30 different companies if invested in Nifty.

How Does an Index Work?

Indexes are designed to track a particular market or asset. For example, the Bank Index (BANK NIFTY) consists of companies that are in core banking space. The logic is that if you buy the stocks in the index, you will gain exposure to the banking sector without having to buy shares in every single banking company in India. The shares in the BANK NIFTY are representative of the banking industry as a whole.

What Does Index-Weighting Mean?

Index-weighting is how the shares in an index basket are allocated; basically how the index is designed. For example, a price-weighted index has different amounts of shares for each stock based on price. A stock worth Rs. 2000 would have 1 share, where a stock worth Rs. 500 would have 4 shares to make it equal to the Rs. 2000 stock.

Another type of weighting is based on market capitalization. The shares of each stock in a cap-weighted index are based on the market value of the outstanding shares. There are also revenue-weighted indexes, fundamentally-weighted indexes and even float-adjusted indexes.

Wednesday, June 23, 2010

Bombay Stock Exchange

Bombay Stock Exchange Limited is the oldest stock exchange in Asia. Popularly known as BSE it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in India to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.

Bombay Stock Exchange played a pivotal role in the development of the Indian capital market and its index, SENSEX, is tracked worldwide. The Exchange has a nation-wide reach with a presence in 359 cities and towns of India. Since its inception BSE has played a vital role the growth of the Indian corporate sector by providing it with an efficient access to resources. The exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. To reach out to a large number of investors BSE has launched its website in Hindi and Gujarati.

Bombay Stock Exchange has several achievements to its credit. It is the world's premier exchange in terms of the number of listed companies and the world's 5th in transaction numbers. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. BSE has also received Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-line Trading System (BOLT). It is only the second exchange in the world to receive such a certification. In February 2001, BSE introduced the world's first centralized exchange-based Internet trading system, BSEWEBX.com. It enables investors anywhere in the world to trade on the BSE platform.

BSE has won several awards for its efficient and responsible working. The World Council of Corporate Governance awarded the BSE with Golden Peacock Global CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR). BSE has also won the Asia-Pacific HRM award for its excellent human resource practices.

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.

BSE 200 Index

BSE 200 Index was constructed and launched on 27th May 1994. The number of companies listed on the Bombay Stock Exchange registered a phenomenal increase from 992 in the year 1980 to about 3,200 companies by the end of March 1994.

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 Bankex

Banking sector reforms such as fall in interest rates, and enactment of Securitization Bill have given a major fillip to Indian banking industry.

BSE PSU Index

BSE - Public Sector Undertaking (PSU) Index is a stock index that tracks the performance of the listed PSU stocks on the Exchange.

BSE TECk Index

The BSE-TECk is a stock index constituted of companies in the Information Technology, Media and Telecom sectors.

Sensex

Sensex is the value-weighted index of the companies listed on the stock exchange. Bombay Stock Exchange (BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market.