Karachi Stock Exchange 100 Index (KSE-100 Index) is a benchmark used to compare prices

over a period of time, companies with the highest market capitalization are selected. However, to
ensure full market representation, the company with the highest market capitalization from each
sector is also included.
The Karachi Stock Exchange has launched the KSE-30 Index with base value of 10,000 points,
formally implemented from Friday, September 1, 2006. The main feature of this index that
makes it different from other indices are:
KSE-30 index is based only on the free-float of shares, rather than on the basis of paid-up
capital.
The other indices in Karachi Stock Exchange represents total return of the market. That is, when
a company announces a dividend, the other indices at KSE are not reduced/adjusted for that
amount of dividend (whether cash or bonus).Whereas, KSE-30 Index is adjusted for dividends
and right shares.
COMPUTATION METHOD
1. OBJECTIVE & DESCRIPTION
The primary objective of the KSE100 index is to have a benchmark by which the stock price
performance can be compared to over a period of time. In particular, the KSE 100 is designed to
provide investors with a sense of how the Pakistan equity market is performing. Thus, the
KSE100 is similar to other indicators that track various sector of the Pakistan economic activity
such as the gross national product, consumer price index, etc.
2. COMPOSITION OF THE KSE100 INDEX
The KSE100 contains a representative sample of common stock that trade on the Karachi Stock
Exchange. The KSE stocks that comprise the index have a total market value of around Rs. 1,197
Billion compared to total market value of Rs. 1,365 Billion for over 679 stocks listed on the
Karachi Stock Exchange. This means that the KSE100 Index represents 88 percent of the total
market capitalization of the Karachi Stock Exchange, as of 27th February, 2004.

3. STOCK SELECTION RULES

The selection criteria for stock inclusion in the recomposed KSE100 Index are:
Rule # 1: Largest market capitalization in each of the 34 Karachi Stock Exchange sectors
excluding open-end Mutual Fund Sector.

Rule # 2: The remaining index places (in this case 66) are taken up by the largest market
capitalization companies in descending order.
A number of the 34 top sector companies may also qualify for inclusion on the basis of their
market capitalization. In other words, companies may qualify solely under rule 1, solely under
rule 2, or under both.
The fact that the sector rule is identified as Rule 1 does not imply that it is more important, only
that the nature of the selection process is such that it is the screening that is done first.