Answer Posted / sonia sharma
BSE Sensex is the prime and older indicator of stock market
trend in India. It consists of 30 stocks representing a
wide cross-section of industries. It is calculated using a
well attested method called free float market
capitalization.
Simply put its the market capitalization of all shares
in "free float!!!" Free float shares are those that are
available for trading in the open market. They rest may be
FDI holdings, promoter holdings, locked in shares,
strategic stakes, ESOPs etc. Suppose 40% of all shares is
openly available. A free float factor is decided by BSE
which would be 0.4 (anything in the band of above 35% -40%
would have this factor). This factor is multiplied with the
total market capitalization of the company (which is the
prevailing share price * total no. of shares issued by the
company) to get the free float market capitalization.
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