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FORMATION OF THE 'BSE-200'
Background : The SENSEX (1978-79=100) has, to a considerable extent, been serving the purpose of quantifying the price movements as also reflecting the sensitivity of the market in an effective manner.
The number of companies listed on the Bombay Stock Exchange has registered a phenomenal increase from 992 in the year 1980 to about 3,200 companies by the end of March 1994 and their combined market capitalisation rose from Rs. 5,421 crores to around Rs. 5,63,748 crores as on 31st March, 1996.
These factors necessitated compilation of a new broad-based index series reflecting the present market trends in a more effective manner and providing a better representation of the increased equity stocks, market capitalisation as also the newly emerged industry groups. Towards this end, the Exchange constructed and launched on 27th May 1994, two index series viz. the BSE-200 and the DOLLEX.
Coverage : The equity shares of 200 selected companies from the specified and non-specified lists of this Exchange have been considered for inclusion in the sample for `BSE-200'. The selection of companies has primarily been done on the basis of current market capitalisation of the listed scrips on the exchange. Besides market capitalisation, the market activity of the companies as reflected by the volumes of turnover and certain fundamental factors were considered for the final selection of the 200 companies.
Choice of Base Year : The financial year 1989-90 has been chosen as the base year for the price stability exhibited during that year and due to its proximity to the current period.
Method of Compilation : BSE-200 index was initially calculated on full market capitalization methodology. Effective August 16, 2005, the calculation methodology was switched to free-float methodology in line with other BSE indices.
THE DOLLEX
The BSE-200 on any day reflects the growth in market value on that day over the base period 1989-90, with both the current market value as well as the base value expressed in rupee terms. The exchange felt a need to design a yardstick by which these growth values can be measured when the investment and the return are expressed in dollar terms, particularly in the present context of the increased willingness shown by foreign investors and growth in the number of foreign financial institutions in the country. This is facilitated by the introduction of a dollar-linked version of the 'BSE-200' in which the formula for calculation of 'BSE-200' is suitably modified to express the current and base market values in dollar terms by dividing the current rupee market value by current rupee-dollar conversion rate and the base value by a constant average rupee-dollar conversion rate in the base year.
Background : The SENSEX (1978-79=100) has, to a considerable extent, been serving the purpose of quantifying the price movements as also reflecting the sensitivity of the market in an effective manner.
The number of companies listed on the Bombay Stock Exchange has registered a phenomenal increase from 992 in the year 1980 to about 3,200 companies by the end of March 1994 and their combined market capitalisation rose from Rs. 5,421 crores to around Rs. 5,63,748 crores as on 31st March, 1996.
These factors necessitated compilation of a new broad-based index series reflecting the present market trends in a more effective manner and providing a better representation of the increased equity stocks, market capitalisation as also the newly emerged industry groups. Towards this end, the Exchange constructed and launched on 27th May 1994, two index series viz. the BSE-200 and the DOLLEX.
Coverage : The equity shares of 200 selected companies from the specified and non-specified lists of this Exchange have been considered for inclusion in the sample for `BSE-200'. The selection of companies has primarily been done on the basis of current market capitalisation of the listed scrips on the exchange. Besides market capitalisation, the market activity of the companies as reflected by the volumes of turnover and certain fundamental factors were considered for the final selection of the 200 companies.
Choice of Base Year : The financial year 1989-90 has been chosen as the base year for the price stability exhibited during that year and due to its proximity to the current period.
Method of Compilation : BSE-200 index was initially calculated on full market capitalization methodology. Effective August 16, 2005, the calculation methodology was switched to free-float methodology in line with other BSE indices.
THE DOLLEX
The BSE-200 on any day reflects the growth in market value on that day over the base period 1989-90, with both the current market value as well as the base value expressed in rupee terms. The exchange felt a need to design a yardstick by which these growth values can be measured when the investment and the return are expressed in dollar terms, particularly in the present context of the increased willingness shown by foreign investors and growth in the number of foreign financial institutions in the country. This is facilitated by the introduction of a dollar-linked version of the 'BSE-200' in which the formula for calculation of 'BSE-200' is suitably modified to express the current and base market values in dollar terms by dividing the current rupee market value by current rupee-dollar conversion rate and the base value by a constant average rupee-dollar conversion rate in the base year.