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SENSEX

By (gi)ULLU
-I know
(“gi” Stands for Global Indian)
BSE Sensex
• Bombay Stock Exchange Limited (the
Exchange) is the oldest stock exchange in Asia
– was established as "The Native Share & Stock
Brokers Association" in 1875
– BSE's On Line Trading System (BOLT) is a
proprietary system of the Exchange
– Till the decade of eighties, there was no scale to
measure the ups and downs in the Indian stock
market
– Stock Exchange, Mumbai (BSE) in 1986 came out
with a stock index that subsequently became the
barometer of the Indian stock market
History
• In1986, BSE Came out with the SENSEX
– is a basket of 30 constituent stocks representing a sample of
large, liquid and representative companies.
– The base year of SENSEX is 1978-79 and the base value is 100
– SENSEX is calculated using the "Free-float Market
Capitalization" methodology
• the level of index at any point of time reflects the Free-float 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.
– This market capitalization is further multiplied by the free-float
factor to determine the free-float market capitalization
Mayhem on Oct 18th
• What is actually happening here
– Sensex crossed 19000
– Move of 1000 points in 4 trading sessions

• Why is this happening; FII’s pumping money ?


– How much ?
• FII's have invested- 4 Bn $ October
• $ 16 Bn for 2007
• The previous record was $ 10 bill $ in 2005 for a single month

– Why ?
• Feb cutting interest rate by 50 bps on Sept 18th and rise in liquidity
• Rupee appreciating vs. Dollar ; Rupee has gained 2.97% in the past one month
• India Growth story intact

• Other markets
– HK has gone by 1.97%
– China 2.5% in 1 week
Quick of what we make of it
• Why India’s Finance Minster angry
– FII putting is money does not come to economy
– In fact, because of pumping in more Dollars into India, RBI has
to dig into our foreign reserves to keep the rupee from
appreciating further as our exports get hit. So don't be happy
about the market boom, it is a bubble built up and will crash
sometime soon. Instead, by this, our industries are getting hit
and also, this appreciation is not a true indicator of the economy
– A windfall for FII they get the benefit for rupee appreciation as
well as the rise in the stock market
– Why are the markets back to normal levels today ?
– Hmmm now that’s interesting …next ppt might give you some
answers