Write short notes on the following: (c) Basis of SENSEX

Sensitive Index or Sensex is the stock market index for the BSE. It is also sometimes referred to as BSE S&P Sensex. The calculation of Sensex is done by a Free-Float method that came into existence from September 1, 2003. The level of Sensex is direct indication of the performance of 30 stocks in the market. The free-float method takes into account the proportion of the shares that can be readily traded in the market. This does not include the ones held by various shareholders and promoters or other locked-shares not available in market. Steps to calculate Sensex The market capitalization is taken into account. This is done by multiplying all the shares issued by the company with the price of its stock. BSE determines a Free-Float factor that is a multiple of the market capitalization of the company. This helps in determining the free-float factor market capitalization based on details submitted by the company. Ratio and Proportion are used based on the base index of 100. This helps to determine the Sensex.