BSE 500

About S&P BSE 500 Index

The BSE 500 index was launched in August 1999 by expanding the existing BSE 200 index. The S&P BSE 500 comprises the top 500 stocks in descending order of average trading volumes and free-float market capitalization listed on the BSE. It is a derived index from the S&P BSE All Cap index and comprises the top 500 leading stocks by the criteria of average trading volumes and free-float market capitalization.

This index is supposed to stand for the market capitalization of companies that are actively traded and freely available on the stock exchange. Unlike the BSE 200, which comprises mainly large-cap companies, the BSE 500 companies are an overwhelming list constituting more than 93% of the total market capitalisation of BSE.

Criteria to Select Stocks for BSE 500

The BSE 500 index is rebalanced semi-annually in June and December of every year. Stocks are being excluded/included during this exercise based on the set criteria of selection. The minimum conditions required for selecting a stock in BSE 500 are as follows: 

• The company should be listed in the BSE All Cap index for at least 6 months.
• The company's shares shall have been traded on more than 80% of the trading days on BSE in the last six months.
• The average trading value of the company's shares should be over INR 1 billion. 

Calculation of S&P BSE 500

The BSE 500 index itself represents the float-adjusted market capitalization of the top 500 listed companies at the BSE. Float-adjusted market capitalization represents a way of calculating of market value of outstanding shares, not including those held by promoters, employees, insiders, or government agents.

The index is computed as detailed below: 

Calculate the Free-Float Market Capitalisation: Multiply the total market capitalization by the free-float factor, which is the percentage of shares that are floatable, for each company. 

Add them up and normalize: Add the free-float market capitalizations of the 500 companies together. This number is then normalized from the base value of the index.

Base Year and Value: The base year for the BSE 500 index is 1998-99, and the base value is 1000. The formula applied is:

BSE 500 Share Price = Free-Float Market Capitalization / Base Value × 1000

The base year was chosen by the lowest coefficient of variation of the BSE 200 index from the date of its commencement.