Formula: - Index divisor X Free Float Market Capitalization
So, first we know about Index Devisor and Market Capitalization.
Market Capitalization: - Many different types of investors hold the shares of a company. The Govt. may hold some of the shares. Some of the shares may be held by the “founders” or “directors” of the company. Some of the shares may be held by the FDI’s etc.
Now, only the “open market” shares that are free for trading by anyone, are called the “free-float” shares. When we are calculating the Sensex, we are interested in these “free-float” shares.
A particular company may have certain shares in the open market and certain shares that are not available for trading in the open market. According the BSE, any shares that DO NOT fall under the following criteria, can be considered to be open market shares
