BSE PSU

S&P BSE PSU

The BSE PSU on the Bombay Stock Exchange index tracks how well Indian government-owned companies are doing. It includes 57 important public companies from nine different areas like banking, oil, power, and mining and more. The S&P BSE PSU index started in 2001, but its history goes back to 1999. It began at 1000 points and has since grown to over 8000 points. 

The index is updated twice a year and its value is calculated using a method that considers how much of each company's shares are available for trading. It is managed by a team from S&P and BSE working together. The value of the index is seen in Indian rupees or US dollars. The index helps investors understand how government businesses are performing overall.

Objective of S&P BSE PSU

Below are a few objectives of Objective of S&P BSE PSU:S&P 

• S&P BSE PSU index assesses the performance of listed shares in PSU enterprises. 
• It also serves as a benchmark for the Central Government to monitor its wealth on bourses.

The BSE PSU Index's Base Date is February 1, 1999, the date the BSE-500 was launched. As a subset of the BSE-500, the BSE PSU Index provides a decent history of how the Central Government's wealth fluctuated on the bourses. The base value of the BSE PSU Index has been set at 1000 to enable enough daily index movement.

How to Select Stocks for Inclusion in BSE PSU?

The BSE PSU share price is calculated by weighting its 57 stocks based on float-adjusted market capitalization, following the S&P Dow Jones equity indexes' divisor approach. The securities must meet the following eligibility criteria to be included in the BSE PSU index: 

1. Should be based in India and listed on the Bombay Stock Exchange.
2. Should be included in the S&P BSE 500 Index.
3. According to the BSE Sector Classification System, it should be classified as a public sector undertaking.
4. The central government, a state government, or a combination of the two should own 51% or more.
5. The BSE PSU index can only contain common stocks; hence, DVRs are not eligible.
6. Companies that have undergone a scheme of arrangement, such as spin-offs or capital restructuring, must have at least one month's listing history to be considered for inclusion.

How is BSE PSU calculated?

To determine the value of the S&P BSE PSU index, use the following formula:

Index value = Index market value / divisor.

Where, 

Index market value = Price * Shares * IWF (float factor)

Divisor = Market Value / Index Value.

The final trading day of April and October serves as the reference date for the semi-annual reconstruction of the BSE PSU index, which takes place in June and December. On the Monday that follows the third Friday in June and December, these modifications take effect. The S&P BSE PSU index stocks are not updated in between rebalances.