SENSEX , NIFTY closes marginally in red - 5/7/2010

(posted under - SENSEX closing, NIFTY closing) - Indian Stock markets closed in red today marginally BSE's SENSEX closed down by meager 19 points whereas NSE's NIFTY closed down by 1.20 pts today

. Tracking today's trading sessions of SENSEX and NIFTY we can easily say that Public companies were the most affected and were down. Major losers for the day were BHEL, NTPC, ONGC, Reliance Communications and BPCL, all of them were over 1 percent down. Market breadth was positive on the NSE with 1784 gainers against 1342 losers. BSE Midcap Index was up 0.29 per cent and BSE Smallcap Index moved 0.32 per cent higher.
BSE Healthcare Index gained 0.53 per cent and BSE IT Index moved 0.39 per cent higher. BSE Oil&gas Index declined 0.79 per cent lower and BSE Metal Index slipped 0.40 per cent.

SENSEX | NIFTY witnessess lackluster trading - Markts flat

(posted under - 5/7/2010 Indian Markets updates) - Major Indian stock indices including BSE'S SENSEX , NSE;s NIFTY are witnessing a lackluster trading day (impact of Bharat Bandh called by NDA). SENSEX is up by meager 5 points and Nifty is up by 6 points when i am writing this post.

Related post:
How BSE Works
BSE Healthcare Index gained 0.69 per cent and BSE Auto Index moved 0.64 per cent higher. BSE Oil&gas Index moved 0.44 per cent lower and BSE Realty Index slipped 0.18 per cent. Mahindra & Mahindra (1.54%), Cipla (1.14%), Tata Motors (1.11%), Sterlite Industries (0.93%) and ACC (0.72%) are the top Sensex gainers.

Majority of top 10 BSE companie's M-cap rockets

(posted under - BSE live, BSE Stocks) - Majority of top 10 companies of BSE added a whopping 17000 crores to their Market Capitalisation, Oil and Natural gas Corporation(ONGC) was first in list and added more then 8000 crores. ONGC gained 3.24 per cent to settle at Rs 1,305.05 at the end of Friday's trade on the Bombay Stock Exchange.

RIL gained 1707 crores, NTPC at the third spot saw its valuation swell by Rs 5,029.73 crore to Rs 1,66,764.43 crore. ITC gained over 190 crores.

It's Power Stocks day at BSE backed by Rel-Power - RNRL

(posted under - BSE live, power sector) - Most of the trading being done today at Bombay Stock Exchange is being done in power stocks today as RNRL- Rel Power merger news are latest RNRL-Reliance Power Merger.

The latest updates from Indian stock markets at noon are : Sensex is trading at 17,482.12, up 21.17 points. The Bombay Stock Exchange sensitive index opened at 17,473.83 against the previous close of 17,460.95 hence a little up.

On other hand Nifty is at 5241.65, up just 4.55 points. The National Stock Exchange benchmark started the session flat at 5237.00 versus Friday’s close of 5237.10. The 50-share index saw a high of 5246.80 against a low of 5225.85.

Reliance Power | RNRL merger at 11 billion all stock deal

The struggling company Reliance Natural Resources Ltd (RNRL), is all set to merge with sister firm Reliance Power (R-Power) in a Rs 50,000-crore, all-stock deal. This would help ADAG in concentrating on its firms which has some meaning and are viable.

The proposed merger is subject to approvals of the shareholders of R-Power and RNRL, the stock exchanges, the High Court here, and all other requisite permissions, sanctions and approvals.

R-Power will retain the assets and people of RNRL, a company with a turnover of Rs 298 crore, and continue to do business in the areas pursued by it, people close to the development said. After the merger, the company’s net worth will exceed Rs 16,000 crore and it will have 600,000 shareholders.

The merger will take the market capitalisation (m-cap) of R-Power to a little over Rs 52,000 crore. Its m-cap was Rs 41,979 crore at the close of trading on Friday and that of RNRL was Rs 10,394 crore. Hence R-power would become a company with it's own transportation of raw materials required for generation of proposed 10000 MW of power.

All about BSE (Bombay Stock Exchange)

In this post i have tried to consolidate all the information which should be known to every investor before investing in Indian Stock Markets like BSE, NIFTY or other regional Stock markets present in various cities of India.

The SENSEX is the benchmark index of the Indian Capital Markets with wide acceptance among individual investors, institutional investors, foreign investors and fund managers. The objectives of the index are:

Doubt - To measure market movements
Given its long history and its wide acceptance, no other index matches the SENSEX in reflecting market movements and sentiments. SENSEX is widely used to describe the mood in the Indian Stock markets.

Benchmark for funds performance
The inclusion of blue chip companies and the wide and balanced industry representation in the SENSEX makes it the ideal benchmark for fund managers to compare the performance of their funds.

For index based derivative products
Institutional investors, money managers and small investors all refer to the SENSEX for their specific purposes The SENSEX is in effect the proxy for the Indian stock markets. The country's first derivative product i.e. Index-Futures was launched on SENSEX.

Doubt - What are the criteria for selection and review of scrips for the SENSEX?
A. Quantitative Criteria:

1. Market Capitalization:
The scrip should figure in the top 100 companies listed by market capitalization. Also market capitalization of each scrip should be more than 0.5 % of the total market capitalization of the Index i.e. the minimum weight should be 0.5 %. Since the SENSEX is a market capitalization weighted index, this is one of the primary criteria for scrip selection. (Market Capitalization would be averaged for last six months)

2. Liquidity:
(i) trading Frequency: The scrip should have been traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like scrip suspension etc. (ii) Number of Trades: Number of Trades: The scrip should be among the top 150 companies listed by average number of trades per day for the last one year. (iii) Value of Shares Traded: Value of Shares Traded: The scrip should be among the top 150 companies listed by average value of shares traded per day for the last one year.

3. Continuity:
Whenever the composition of the index is changed, the continuity of historical series of index values is re-established by correlating the value of the revised index to the old index (index before revision). The back calculation over the last one-year period is carried out and correlation of the revised index to the old index should not be less than 0.98. This ensures that the historical continuity of the index is maintained.

4. Industry Representation:
Scrip selection would take into account a balanced representation of the listed companies in the universe of BSE. The index companies should be leaders in their industry group.

5. Listed History:
The scrip should have a listing history of at least one year on BSE.

B. Qualitative Criteria:

Track Record:
In the opinion of the Index Committee, the company should have an acceptable track record.

Doubt - calculation of SENSEX scrips:

SENSEX is calculated using a "Market Capitalization-Weighted" methodology. As per this methodology, the level of index at any point of time reflects the total market value of 30 component stocks relative to a base period. (The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company). An index of a set of a combined variables (such as price and number of shares) is commonly referred as a 'Composite Index' by statisticians. A single indexed number is used to represent the results of this calculation in order to make the value easier to work with and track over time. It is much easier to graph a chart based on indexed values than one based on actual values.

The base period of SENSEX is 1978-79. The actual total market value of the stocks in the Index during the base period has been set equal to an indexed value of 100. This is often indicated by the notation 1978-79=100. The formula used to calculate the Index is fairly straightforward. However, the calculation of the adjustments to the Index (commonly called Index maintenance) is more complex.

The calculation of SENSEX involves dividing the total market capitalization of 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. It keeps the Index comparable over time and is the adjustment point for all Index maintenance adjustments. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate SENSEX every 15 seconds and disseminated in real time.

Doubt - SENSEX closing calculations:

The closing SENSEX is computed taking the weighted average of all the trades on SENSEX constituents in the last 15 minutes of trading session. If a SENSEX constituent has not traded in the last 15 minutes, the last traded price is taken for computation of the Index closure. If a SENSEX constituent has not traded at all in a day, then its last day's closing price is taken for computation of Index closure. The use of Index Closure Algorithm prevents any intentional manipulation of the closing index value.

Doubt - adjustments for Bonus, Rights and newly issued Capital carried out in SENSEX:

The arithmetic calculation involved in calculating SENSEX is simple, but problem arises when one of the component stocks pays a bonus or issues rights shares. If no adjustments were made, a discontinuity would arise between the current value of the index and its previous value. The Index Cell of the Exchange periodically adjusts the base value to take care of such corporate announcements.
Adjustments for Rights Issues:
When a company, included in the compilation of the index, issues right shares, the market capitalisation of that company is increased by the number of additional shares issued based on the theoretical (ex-right) price. An offsetting or proportionate adjustment is then made to the Base Market Capitalisation (see ' Base Market Capitalisation Adjustment' below).
Adjustments for Bonus Issue:
When a company, included in the compilation of the index, issues bonus shares, the market capitalisation of that company does not undergo any change. Therefore, there is no change in the Base Market Capitalisation, only the 'number of shares' in the formula is updated.
Other Issues: Base Market Capitalisation Adjustment is required when new shares are issued by way of conversion of debentures, mergers, spin-offs etc. or when equity is reduced by way of buy-back of shares, corporate restructuring etc.
Base Market Capitalisation Adjustment: The formula for adjusting the Base Market Capitalisation is as follows:

New Base Market Capitalisation = Old Base Market Capitalisation X (New Market Capitalisation/Old Market Capitalisation)

To illustrate, suppose a company issues right shares which increases the market capitalisation of the shares of that company by say, Rs.100 crores. The existing Base Market Capitalisation (Old Base Market Capitalisation), say, is Rs.2450 crores and the aggregate market capitalisation of all the shares included in the index before the right issue is made is, say Rs.4781 crores. The "New Base Market Capitalisation " will then be: Rs.2501.24 crores = 2450 X (4781+100)/4781

This figure of 2501.24 will be used as the Base Market Capitalisation for calculating the index number from then onwards till the next base change becomes necessary.