How is NSE stock exchange value calculated
NSE stands for National Stock Exchange and is located at New Delhi. Along with BSE (Bombay Stock Exchange), NSE is the major stock exchange in India. But we had lot of queries as how is NSE stock exchange value calculated? To know how NSE stock exchange value is calculated, we need to know what an index is. An Index is basically an indicator which shows whether most of the stocks have gone up or they have gone down. Often confused for each other by a layman, Sensex and Nifty are two different indicators.
While Sensex is an indicator of all major companies of BSE, Nifty is an indicator of all major companies of the NSE. Nifty represent all the major stocks of top 50 companies registered at National Stock Exchange.
More about NIFTY
As the name suggests, NIFTY is a composition of two words, ‘National’ and ‘Fifty’. National is derived from NSE and Fifty means the stocks of top 50 companies from various sectors on NSE. Nifty, as such is a bit broader than Sensex since the latter is constructed using just 30 actively traded stocks in the BSE.
How is NSE stock exchange value calculated?
The methodology involved in calculating NSE stock exchange is quite simple as well as complicated at the same time. For a layman to understand easily, this is how it is roughly calculated.
Stock Exchange Value = Current Free Float market value of stocks / Index Divisor
Free-Float market value = (the total shares of the company) x (market price) x (percentage of shares available for public to trade in the market)
What is noteworthy is that you do not need to calculate Free-Float market value as it is available on the NSE website on a real-time basis.
An Index Divisor is nothing but the level of index. If you know free-float market capitalization and the value of Nifty at any point in time, you can easily calculate the Index Divisor.
If you are not sure about any term being used in calculating NSE stock exchange value, you can surely search internet for understanding of those terminologies in a detailed way.