A very basic Question on SENSEX

Hello Everyone.

I am new to the forum and i hope this is going to be the best place for me to get the answers i am searching for

A very basic question on SENSEX calculation. I hope everyone is aware about the money control site (http://www.moneycontrol.com/sensex/bse/sensex-live) where you can see the 3 items below


Today's sensex
Stocks Comprising The SENSEX
Stocks contributing to the SENSEX movement today

My Question is very simple

How you calculate sensex?
In this "Stocks Comprising The SENSEX" You can see weight - How it is calculated?
Similarly In "Stocks contributing to the SENSEX movement today" you can see Contribution - How it is calculated?

Also, I see the Free float adjustment factor in BSE site (http://www.bseindia.com/about/abindices/bse30.asp) - (download index constitutients) where some numbers are given - What is this?

Please provide me the mathematical formulas. This is really going to help me a lot in taking a session on sensex.

I know very few informations like it comprises of 30 stocks and the average movement of these stocks determine the sensex. What i am looking at is the real formulas

Experts - Thanks a mill

There are three commonly used methos for constructing indices
1> Price weighted method
2> Equally weighted mmethod
3> Market Capitalization weighted method.

The SENSEX(BSE) ans NIFTY ,both indices are constructed as market capitalization weighted indices. In this method ,formula used to calculate index is :
INDEX = CURRENT MARKET CAPITALIZATION * BASE VALUE / BASE MARKET CAPITALIZATION

WHERE:
CURRENT MARKET CAPITALIZATION = Sum of (number of outstanding shares * current market price) all stocks in the index.

BASE MARKET CAPITALIZATION = Sum of (number of outstanding shares * market price) all stock in index as on base date

Base value = 100 or 1000
The sensex is the index of BSE.It is a 30 stock index.It's base year is 1978-79.It's base value is 100.

The NIFTY is a 50 stock index.It's base year is 1995. It's base value is 1000.


Hope this answers your query.

Thank You

Yes it is useful to me. But still I have some questions.

BASE MARKET CAPITALIZATION = Sum of (number of outstanding shares * market price) all stock in index as on base date

In the above formula how you will get the informations (o/s shares and mkt price) as on base date

Any solutions for my other questions .. How to find contribution of each stock towards sensex and the weight.

I would appreciate an example.

Thankyou

sorry for late reply.......i think u can pull base info from net or might be vailable on nse/bse

ok. I will try getting from NSE/BSE

You got any idea on the calculation of contribution and the weight

Sensex Calculation

I have cleared from this link. Check-it

Sensex Calculation