BSE 100

What is BSE 100?

We all have heard about the major stock index in India, which is the Sensex. But do you know there are various other indexes that reflect the growth in the Indian economy? BSE 100 is one such index. So let us get to know it in detail. 

S&P BSE 100 stock index is designed to track the performance of the top 100 most liquid companies from those listed on the stock exchange. The stocks chosen to be a part of the BSE 100 index are either from the mid-cap or the large-cap category. The value of these stocks is float-adjusted. The value of the index changes with the change in the BSE 100 share price. 

In other words, only those shares are considered that are available for trading in the market, and it does not include closely-held shares. The list of BSE 100 companies is reviewed and revised twice every year, i.e., bi-annually in June and December. Various factors are considered while selecting the top 100 stocks to include in S&P BSE 100. 

BSE also calculates a dollar-based version of BSE SENSEX 100, which is known as Dollex-100. This index reflects the value of BSE 100 in terms of USD. 

History of BSE 100

The BSE 100 index was launched for the first time in 1989 as the BSE National Index. It was renamed as S&P BSE 100 index in 1999 and currently represents almost 2/3rd of the total market cap of stocks listed on the stock exchange. 

What is BSE?

BSE, or the Bombay Stock Exchange, was established in 1875 and is one of the largest exchanges and a first of its kind. BSE is not only the largest in India but also one of the largest stock exchanges in the world, with over 6000 listed companies. BSE uses the electronic trading system to minimise errors, better efficiency and quick execution. The overall performance of BSE is determined by Sensex. Sensex represents the 30 largest stocks across 12 different sectors. 

On what basis are stocks selected to be a part of the BSE 100?

Earlier, the BSE 100 was calculated using the full market capitalisation method, which considered both actively traded shares and closely held shares. But in 2003, it was changed to the float-adjusted market capitalisation method, wherein only the shares readily available for trading in the market are considered while calculating the market cap. 

Steps to calculate float-adjusted market capitalisation -

Step-1 Calculate the market capitalisation of a company by multiplying the total number of shares with the market price or BSE 100 share price.  

Step-2 Now, determine the percentage of shares that are available for free trading in the market.

Step-3 Then, multiply the market capitalisation calculated in step 1 and multiply it by the percentage of free-float to find out the float-adjusted market capitalisation. 

Let us understand this with an example -

Company Z has 1 lakh shares issued in the market. Out of them, only 60% can be traded freely on the stock exchange. Let’s say the market price of the stock is INR 500. Then, it will be calculated as follows -

Now, the float-adjusted market cap of all 100 companies is added, and the value derived thereof is divided by the market cap in the base year (1983-1984) and multiplied by the base value of 100. 

Here’s the formula -

Criteria for Selecting Stocks

• The stocks should have a listing history of at least 3 months. 
• The company should belong to either the large-cap or small-cap category.
• The companies should be highly liquid and should be traded for at least 95% days in the last 3 months.
• The revenue of the companies should be from core activities. 
• The companies should have an annualised traded value of more than 10 million.