Know about more key terms

Market Capitalization --- it is the worth of the company in terms of shares...

Mathematically,

Market Capitalization = No. of outstanding shares x Current market price of one share

Here outstanding shares includes restricted shares owned by the company's officers and insiders, as well as those held by the public.

For eg. Consider a company called XYZ which issues 500 outstanding shares and each share costs Rs.100 then Full Market capitalization of the company is 500 x 100 = Rs.50000

Based on this market capitalization values only companies are classified into "large-cap", "mid-cap" and "small cap" ....

Free float shares --- The shares that are free for trading by anyone, are called the “free-float” shares

[ because there are shares that can be held by the founder or the government or sometimes it involves even FDI(Foreign direct investment) and not subjected in open market...]

Consider the XYZ company has 150 shares owned by its founder and 50 shares owned by the govt. then no. of free float shares = 500 - 150 - 50 = 300.

Free float factor --- it is normally issued by the corresponding stock exchanges depending on how many shares belong to whom...

Free float factor of company XYZ is 300/500 = 0.6

[Free-float factor of say 0.6 means that only 60% of the market capitalization of the company will be considered for index calculation... ]

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More on SENSEX!!!

Sensex is a composite of top 30 stocks in Bombay stock exchange(BSE).

LIST OF COMPANIES INCLUDED IN BSE AS ON SEPTEMBER 2007

Why prefer NSE compared to BSE ???

As you see from the list of companies above and on the previous post, few companies comes under both the categories... this is because the company is doing well not only in BSE but also in NSE... As NSE gives you wide variety of options people tend to do trading in NSE more ;-) its just accessibility...However, buying a wipro share in NSE is same as owning it in BSE as both will lead to common results only...

More on NIFTY !!!

The Nifty Index is a composite of the top 50 stocks listed on the National Stock Exchange (NSE). Full name for Nifty is S&P CNX Nifty (Standard and Poor 's CRISIL NSE index 50)... Here CRISIL stands for Credit Rating and information service of india Ltd... it is one of India's leading rating, research, risk and policy advisory company.

LIST OF NIFTY COMPANIES AS ON SEPTEMBER 27, 2007

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Some basic definitions

What is a Stock ?

A 'STOCK' represents share in the ownership of a company. A person owning a companies stock means he is also considered as one of the many owners of the company. Other names by which stocks are denoted are share or equity...



Stock exchange :

The place where these stocks or shares are bought and sold is called 'Stock Exchange'. In india there are many stock exchanges like National stock exchange (NSE), Bombay stock exchange (BSE), Calcutta stock exchange etc. Out of these BSE and NSE are very famous because most of the stock trading in the country is done through these exchanges only.

Sensex & Nifty :

It is mandatory to have an indicator in order to analyze the growth of stock market !!! This we normally call it as INDEX...

Here Sensex is the index of BSE whereas Nifty is the index of NSE. In addition to Sensex and Nifty there are many other indexes but for beginner level these two are enough ;-)


Some amazing facts - On 25th july, 1990 the Sensex touched the magical four-digit figure for the first time and closed at 1,001. Now in 8th jan, 2008 the Sensex have crossed the 21,000-mark => rapid growth in our economy!!!

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