About S&P BSE Power Index
While the BSE compiles numerous comprehensive indexes that include equities from many sectors, they contribute to a better understanding of market movements. Individual industries, such as power, oil, and gas, have a significant impact on global economic activity. As a result, it is also critical to investigate the consequences of these sectors separately.
In November 2007, the BSE introduced the BSE Power Index to evaluate the top firms in the power industry, which collectively account for more than 90% of the entire market capitalization of India's power sector. S&P BSE Power includes stocks from the BSE 500 index.
As the name implies, the Power sector includes enterprises that generate and distribute power, as well as those that manufacture heavy electrical equipment. The S&P BSE Power Index also includes electrical utilities. Adani Transmission Limited, Power Grid Corporation of India Limited, and NTPC Limited are some of the main Indian power corporations.
The BSE Power share price is derived using the free-float market capitalization-weighted technique. This index includes equities from the BSE 500 index and accounts for 90% (+/- 2%) of the entire market capitalization of India's power sector.
The value of BSE Power is computed in real-time and reported in two denominations: INR and USD. The index is rebalanced semiannually, between June and December. Investors and researchers can foresee industry and company developments by examining the movement of the BSE Power Share price.
Criteria to include stocks in the BSE Power Index
The following are the conditions for a stock to be included in the BSE Power Index:
- These stocks should also be a component of the BSE 500.
- The stocks should be frequently traded, i.e., at least 90% of the trading sessions over the last six months.
- The average trading value of the stock should be at least INR one billion.
After deciding which stocks to include in the BSE Power Index, the next step is to rank them according to their free-float market size. This strategy only considers equities that can be freely traded on the stock exchange. This implies that government-owned shares or ESOPs that are barred from free trade are removed when computing the BSE Power share price.
The BSE Power Index currently includes 11 members. Together, these equities account for 90% of India's entire market capitalization of Power Sector firms. As a result, these corporations have a significant impact on the overall power sector. After determining the individual free-float market capitalization of all 11 index participants, the values are combined.
How to Calculate the BSE Power Index?
The formula for calculating the value of the BSE Power Index:
BSE Power Share Price = Total Free-Float Market Capitalization x Index Value for the Base Year/Market Capitalization for the Base Year.
