Ppt on Sensex by Anup Kumar Ojha

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USHA MARTIN ACADEMY

1

1/16/2012

Presented By Anup Kumar Ojha

Introduction2

The Bombay Stock Exchange building located on Dalal Street, Mumbai.

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What are the Sensex & the Nifty?3

The Sensex is an "index". What is an index? An index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE.

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Introduction4

If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down. Just like the Sensex represents the top stocks of the BSE, the Nifty represents the top stocks of the NSE.

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History of BSE Sensex5

The Bombay Stock Exchange SENSEX (portmanteau of sensitive and ind ex) also referred to as BSE 30 is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. The 30 component companies which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy.USHA MARTIN ACADEMY 1/16/2012

History6

since January 1, 1986, the SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year as 1978-79. On 25 July, 2001 BSE launched DOLLEX-30, a dollarlinked version of SENSEX. As of 21 April 2011, the market capitalisation of SENSEX was about 29,733 billion (US$565 billion) (42.34% of market capitalization of BSE), while its free-float market capitalization was 15,690 billion (US$298 billion).USHA MARTIN ACADEMY 1/16/2012

Calculations7

The Bombay Stock Exchange (BSE) regularly reviews and modifies its composition to be sure it reflects current market conditions. The index is calculated based on a free float capitalization methoda variation of the market capitalization method. Instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by promoters, government and strategic investors.USHA MARTIN ACADEMY 1/16/2012

Calculations8

Initially, the index was calculated based on the full market capitalization method. However this was shifted to the free float method with effect from September 1, 2003. Globally, the free float market capitalization is regarded as the industry best practice. As per free float 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 multiplied by a free float factor to determine the free float market capitalization. Free float factor is also referred as adjustment factor. Free float factor represent the percentage of shares that are readily available for tradingUSHA MARTIN ACADEMY 1/16/2012

List of BSE SENSEX companies9

List of BSE SENSEX companies provides details of all companies that have been included in the BSE SENSEX from its inception in 1986. The base year of SENSEX is 1978-79 with a base value of 100. During the introduction of the SENSEX in 1986, some of the companies included in the base calculation in 1979 were removed and new companies were added.

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List of BSE SENSEX companies10

Code 532977 532454 500103 500087 533278 532868 500010 500180 500182 500440 500696

Name Bajaj Auto Ltd Bharti Airtel Ltd BHEL Ltd Cipla Ltd Coal India Ltd DLF Ltd HDFC Ltd HDFC Bank Ltd Hero Motorcorp Ltd Hindalco Industries Ltd Hindustan Lever Ltd

Sector Automotive Telecom Capital Goods Pharmaceutical Power Construction Finance Finance Automotive Aluminum FMCG[

Adj. Factor 0.55 0.35 0.35 0.6 0.1 0.2 0.90 0.85 0.50 0.6 0.50 1/16/2012 1.6 3 2.2 1.2 2 0.6 6.8 7.1 1.43 1.5 2.8

Weight in Index(%)

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532174 500209 50087511

ICICI Bank Ltd Infosys Ltd ITC Ltd Jaiprakash Associates Ltd

Finance

1.00

8.8 9.4 8.3 0.5 1.8 8 2.3 1.3 1.2 3.1 9.2 4.7 1.4 1/16/2012

Information Technology 0.85 FMCG Housing Related 0.70 0.55 0.55 1 0.75 0.50 0.15 0.20 0.50 0.45 0.45

532532 532286 500510 500520 532500 532541 500312 500325 500112 500900

Jindal Steel & Power Ltd Steel Larsen & Toubro Ltd Mahindra & Mahindra Ltd Maruti Suzuki Ltd NTPC Ltd ONGC Ltd Reliance Industries Ltd SBI Sterlite Industries Ltd Engineering Automotive Transport Equipments Power Oil & Gas Oil & Gas Finance Metal, Metal Products, and Mining

USHA MARTIN ACADEMY

524715

Sun Pharmaceutical Healthcare Industries Ltd

0.40

1.5

12

532540

TCS Ltd

Information Technology

0.3

3.8

500570

Tata Motors Ltd

Transport Equipments 0.55

2

500400

Tata Power Ltd

Power

0.70

1.6

500470

Tata Steel Ltd

Metal, Metal Products & Mining

0.70

2.7

507685

Wipro Ltd

Information Technology

0.20

1.4

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Some of the historical replacements were:13

DLF replaced Dr. Reddy's Lab on November 19, 2007. Jaiprakash Associates Ltd replaced Bajaj Auto Ltd on March 14, 2008. Sterlite Industries replaced Ambuja Cements on July 28, 2008. Tata Power Company replaced Cipla Ltd. on July 28, 2008. Sun Pharmaceutical Industries replaced Satyam Computer Services on January 8, 2009 Hero Honda Motors Ltd. replaced Ranbaxy on June 29, 2009 Cipla to replace Sun Pharma from May 3, 2010 Grasim replaced JSPL in 2010 Bajaj Auto replaced ACC from Dec 6th, 2010 Coal India replaced Reliance Infrastructure and Sun Pharmaceutical replaced Reliance Communications from Aug 8th, 2011USHA MARTIN ACADEMY 1/16/2012

Milestones:The graph of SENSEX from July 1997 to March 201114

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Timeline on the rise of the SENSEX through Indian stock market history.15

1000, July 25, 1990 - On July 25, 1990, the SENSEX touched the four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results. 2000, January 15, 1992 - On January 15, 1992, the SENSEX crossed the 2,000-mark and closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then finance minister and current Prime Minister Dr Manmohan Singh. 3000, February 29, 1992 - On February 29, 1992, the SENSEX surged past the 3000 mark in the wake of the market-friendly Budget announced by Manmohan Singh. 4000, March 30, 1992 - On March 30, 1992, the SENSEX crossed the 4,000-mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and SENSEX witnessed unabated selling. 5000, October 11, 1999 - On October 8, 1999, the SENSEX crossed the 5,000-mark as the Bharatiya Janata Party-led coalition won the majority in the 13th Lok Sabha election. 6000, February 11, 2000 - On February 11, 2000, the information technology boom helped the SENSEX to cross the 6,000-mark and hit and all time high of 6,006.

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7000, June 21, 2005 - On June 20, 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL, Reliance Energy, Reliance Capital and IPCL made huge gains. This helped the SENSEX crossed 7,000 points for the first time. 8000, September 8, 2005 - On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index the SENSEX - crossed the 8000 level following brisk buying by foreign and domestic funds in early trading. 9000, December 9, 2005 - The SENSEX on November 28, 2005 crossed 9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well as retail investors.USHA MARTIN ACADEMY 1/16/2012

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10,000, February 7, 2006 - The SENSEX on February 6, 2006 touched 10,003 points during mid-session. The SENSEX finally closed above the 10,000-mark on February 7, 2006. 11,000, March 27, 2006 - The SENSEX on March 21, 2006 crossed 11,000 and touched a peak of 11,001 points during mid-session at the Bombay Stock Exchange for the first time. However, it was on March 27, 2006 that the SENSEX first closed at over 11,000 points. 12,000, April 20, 2006 - The SENSEX on April 20, 2006 crossed 12,000 and touched a peak of 12,004 points during mid-session at the Bombay Stock Exchange for the first time. 13,000, October 30, 2006 - The SENSEX on October 30, 2006 crossed 13,000 for the first time. It touched a peak of 13,039.36 and finally closed at 13,024.26. 14000, December 5, 2006 - The SENSEX on December 5, 2006 crossed 14,000. 15,000, July 6, 2007 - The SENSEX on July 6, 2007 crossed 15,000 mark. 16,000, September 19, 2007 - The SENSEX on September 19, 2007 crossed the 16,000 mark.

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17,000, September 26, 2007 - The SENSEX on September 26, 2007 crossed the 17,000 mark for the first time. 18,000, October 9, 2007 - The SENSEX on October 9, 2007 crossed the 18,000 mark for the first time. 19,000, October 15, 2007 - The SENSEX on October 15, 2007 crossed the 19,000 mark for the first time. 20,000, October 29, 2007 - The SENSEX on October 29, 2007 crossed the 20,000 mark for the first time. 21,000, Jan 08, 2008 - The SENSEX on January 8, 2008 touched all time peak of 21078 before closing at 20873.[4] November 5, 2010 - The SENSEX on November 5, 2010 closes at 20,893.6 with highest peak in two years.USHA MARTIN ACADEMY 1/16/2012

Effects of the Subprime crisis in the U.S19

On Monday July 23, 2007, the SENSEX touched a new height of 15,733 points. On July 27, 2007 the SENSEX witnessed a huge correction because of selling by Foreign Institutional Investors (FIIs) and global cues to come back to 15,160 points by noon. Following global cues and heavy selling in the international markets, the BSE SENSEX fell by 615 points in a single day on Wednesday August 1, 2007.

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Participatory notes issue20

On October 16, 2007, SEBI (Securities & Exchange Board of India) proposed curbs on participatory notes which accounted for roughly 50% of FII investment in 2007. SEBI was not happy with P-notes because it was not possible to know who owned the underlying securities, and hedge funds acting through P-notes might therefore cause volatility in the Indian markets. However the proposals of SEBI were not clear and this led to a knee-jerk crash when the markets opened on the following day (October 17, 2007). Within a minute of opening trade, the SENSEX crashed by 1744 points or about 9% of its value - the biggest intra-day fall in Indian stock markets in absolute terms till thenUSHA MARTIN ACADEMY 1/16/2012

May 200621

On May 22, 2006, the SENSEX plunged by 1100 points during intra-day trading, leading to the suspension of trading for the first time since May 17, 2004. The volatility of the SENSEX had caused investors to lose Rs 6 lakh crore (US$131 billion) within seven trading sessions. The Finance Minister of India, P. Chidambaram, made an unscheduled press statement when trading was suspended to assure investors that nothing was wrong with the fundamentals of the economy, and advised retail investors to stay invested. When trading resumed after the reassurances of the Reserve Bank of India and the Securities and Exchange Board of India (SEBI), the SENSEX managed to move up 700 points, still 450 points in the red.

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January 200822

In the third week of January 2008, the SENSEX experienced huge falls along with other markets around the world. On January 21, 2008, the SENSEX saw its highest ever loss of 1,408 points at the end of the session. The SENSEX recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of a recession in the US.USHA MARTIN ACADEMY 1/16/2012

SENSEX falls23

Some major single-day falls of the SENSEX have occurred on the following dates:[8] January 21, 2008 --- 1,408.35 points Oct 24, 2008---1070.63 points March 17, 2008 --- 951.03 points July 6, 2009 --- 870 points January 22, 2008 --- 857 points February 11, 2008 --- 833.98 points May 18, 2006 --- 826 points October 10, 2008 --- 800.10 points March 13, 2008 --- 770.63 points December 17, 2007 --- 769.48 points January 7, 2009 --- 749.05 points March 31, 2007 --- 726.85 points October 6, 2008 --- 724.62 pointsUSHA MARTIN ACADEMY 1/16/2012

SENSEX falls24

October 17, 2007 --- 717.43 points September 15, 2008 --- 710.00 points September 22, 2011 --- 704.00 points January 18, 2007 --- 687.82 points November 21, 2007 --- 678.18 points August 16, 2007 --- 642.70 points August 17, 2009 --- 626.71 points June 27, 2008 --- 600.00 points February 24, 2011 --- 545.92 points November 12, 2010 --- 432 Points November 16, 2010 --- 444.55 Points February 4, 2011 --- 441.92 PointsUSHA MARTIN ACADEMY 1/16/2012

Any Questions25

?

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