02-02-2013, 09:56 AM
Bombay Stock Exchange Sensitive Index
Bombay Stock Exchange.docx (Size: 18.96 KB / Downloads: 33)
Introduction:-
The BSE SENSEX (Bombay Stock Exchange Sensitive Index), also called the BSE 30 (BOMBAY STOCK EXCHANGE)or simply the SENSEX, is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange (BSE). The 30 component companies which are some of the largest and most actively traded stocks are representative of various industrial sectors of the Indian economy. Published since January 1, 1986, the SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year as 1978-79. As of 21 April 2011, the market capitalization of SENSEX was about 29,733 billion (US$562 billion) (42.34% of market capitalization of BSE), while its free-float market capitalization was 15,690 billion (US$297 billion).
Objective of Study:-
The objective of the study is to determine whether their exists a direct/linear relationship between the BSE-30 Sensex and the BSE – BankEX and also to determine the strength of the relationship.
Methodology:-
The objective of study is to be achieved by using the statistical techniques of Standard deviation, Regression Analysis and Correlation. Regression Analysis gives us the relationship between the BSE 30 Sensex(Independent variable)& BankEx(Dependent Variable). Standard Deviation enables us to determine as to how far the individual items (closing level of indices every month) in the distribution deviates from its mean. Correlation helps us to know the nature and strength of the relationship between the two variables.
Data Collection:-
The data is collected from the BSE site (www.bseindia.com) from the historical data section of indices. The data collected is of BSE-30 index and BankEx. The data includes the opening level, highest level, lowest level, shares traded, turnover, price/earning ratio, price/book value ratio and dividend yield corresponding to each month within the period of Jan-2007 & oct-2012. The closing level data of each month of the two indices is the main data to be used for calculation purpose. Rest all are supporting data.
Conclusion:
The Correlation Value of 0.92 indicates that both the indices have a positive linear relationship. This indicates that both the indices move in the same direction i.e. they rise & fall simultaneously. The regression equation helps one to understand how much BankEx index will rise or fall in the event of rising & falling of BSE-30 index.