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TS Bhatia (HR Executive)     17 October 2008


how is daily sens*x calculated ?


 6 Replies

Sankaranarayanan (Advocate)     17 October 2008

SENSEX is calculated using the "Free-float Market Capitalization" methodology. As per this methodology, the level of index at any point of time reflects the Free-float 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. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of SENSEX involves dividing the Free-float 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 adjustments arising out of corporate actions, replacement of scrips etc. 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.


BSE also calculates a dollar-linked version of SENSEX and historical values of this index are available since its inception. (For more details click ‘Dollex series of BSE indices’)

Understanding Free-float Methodology


Free-float Methodology refers to an index construction methodology that takes into consideration only the free-float market capitalization of a company for the purpose of index calculation and assigning weight to stocks in Index. Free-float market capitalization is defined as that proportion of total shares issued by the company that are readily available for trading in the market. It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course. In other words, the market capitalization of each company in a Free-float index is reduced to the extent of its readily available shares in the market.

In India, BSE pioneered the concept of Free-float by launching BSE TECk in July 2001 and BANKEX in June 2003. While BSE TECk Index is a TMT benchmark, BANKEX is positioned as a benchmark for the banking sector stocks. SENSEX becomes the third index in India to be based on the globally accepted Free-float Methodology

prabodh kumar patel (advocate)     17 October 2008

ca.bhupendrashah (FCADISA)     17 October 2008


N.K.Assumi (Advocate)     18 October 2008

Thank you Mr.Sankar.


N.K.Assumi (Advocate)     20 October 2008

Dear Sankar, Using the sens*x can you predict the effect of Indian Financial sector by the present global financial turmoil? What will be the actual financial scenario of India, by the crush of lehman brothers and merrill lynch. I will be very grateful if you can write on this issue. Our Hon'ble Finance Minister was assuring the Country only a week back that the Indian banking are insulated from the US crisis, but the crisis has reached our shore, whereas pakistan appears to be cool. Can you please throw some lights on this matter for all of us? Thanking you in advance.

Rajan Salvi (Lawyer)     20 October 2008

Wow  Mr sankar , u really have a grip of ur subject.

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