Sensex to have only ‘BSE 100’ firms from June

The 30 companies in the Sensex will be derived only from the BSE 100 segment from June onwards, Asia Index, a BSE and S&P Dow Jones Indices joint venture, said on Tuesday. At present, all common equities listed on the BSE are considered eligible. However, it excluded companies classified in Z group, listed mutual funds, firms suspended on the last day of the month prior to review date, the ones objected to by BSE’s surveillance department and those traded under a permitted and SME category. In a circular, Asia Index said, “S&P BSE Sensex will be derived from S&P BSE 100.” The new methodology will become effective from June 2016. S&P BSE Sensex, first compiled in 1986, was calculated on a “market capitalisation-weighted” methodology of 30 component stocks representing large, well-established and financially sound companies across key sectors.

Since September 2003, this is being calculated on a free-float market capitalisation methodology. The free-float market capitalisation-weighted methodology is a widely followed index construction methodology on which majority of global equity indices are based. All major index providers like MSCI, FTSE, STOXX, and Dow Jones use the free-float methodology.