BSE 200 Index was constructed and launched on 27th May 1994. The number of companies listed on the Bombay Stock Exchange registered a phenomenal increase from 992 in the year 1980 to about 3,200 companies by the end of March 1994. These factors necessitated compilation of a new broad-based index series reflecting the present market trends in a more effective manner and providing a better representation of the increased equity stocks, market capitalization as also the newly emerged industry groups.
The equity shares of 200 selected companies from the specified and non-specified lists of this Exchange have been considered for inclusion in the sample for `BSE-200'. The companies have been selected on the basis of current market capitalization of the listed scrips on the exchange, the market activity as reflected by the volumes of turnover of the companies, and certain fundamental factors.
The financial year 1989-90 was chosen as the base year because of the price stability exhibited during that year and due to its proximity to the current period.
The purpose of the index is to quantify price movements and monitor sensitivity of the market. The rapid growth in the market created need for a new broad-based index series reflecting the market trends in a more effective manner and providing a better representation of the increased equity stocks, market capitalization as also to the new industry groups.
COMPANY SELECTION CRITERIA
Companies are selected based on current market capitalization of the listed stocks and the market activity of the companies - transaction volumes and specific fundamental factors.
- Trading Frequency - The stock should have been traded on 90% of the trading days in the last three months. Exceptions can be made for extreme reasons like stock trading suspension etc.
- Final Rank - The stock should be in the top 350 companies listed by final rank. The final rank is calculated at by assigning 75% weightage to the rank on the basis of three-month average full market capitalization and 25% weightage to the liquidity rank based on three-month average daily turnover & three-month average impact cost.
- Industry - Stock selection would generally take into account a balanced industry representation of the listed companies in BSE.
- Track Record - The company's track record should be acceptable by BSE Index Committee.
