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Source-This post on How India’s major stock indices work has been created based on the article “Adani Ports to enter Sensex: how India’s major stock indices work” published in “Indian Express” on 27 May 2024.
Why in News?
The Sensex at the Bombay Stock Exchange will include Adani Ports and Special Economic Zone Ltd (APSEZ) as the first Adani Group company, replacing Wipro.
About Sensex at the BSE
1) It was established in 1986. The Sensex is India’s oldest and most closely watched stock index.
2) It consists of the 30 largest most liquid, and financially sound companies across key sectors of the Indian economy, including Reliance Industries, ICICI Bank, and ITC Ltd.
3) The total market capitalization of BSE-listed firms was reported as Rs 419.99 lakh crore as of May 24.
4) Criteria for Selection in Sensex:
a) A stock must have been listed on the BSE for at least six months and should have been traded on every trading day during this period.
b) It should be among the top 75 companies based on their average three-month float or total market capitalization.
c) A minimum free-float market cap of 0.50% is required after meeting market cap and liquidity criteria.
5) Liquidity Considerations: The liquidity is assessed by the cumulative weight of the three-month average daily value traded (ADVT). Stocks whose ADVT cumulative weight exceeds 98% are excluded from consideration for the index.
About Nifty at the NSE
a) The Nifty 50 was initiated in November 1995. It includes 50 blue-chip, large, and liquid stocks.
Note: A blue chip stock is stock issued by a large, well-established, financially-sound company with an excellent reputation.
b) The market capitalization of NSE-listed companies was Rs 416.04 lakh crore as of the same date.
UPSC Syllabus: Indian Economy
