Bse-500 Index Launch In October

The new index will be an on-line index which will be culled from among the best 500 stocks listed on the exchange, the BSE president M G Damani said yesterday.

The Crisil-500 is not a real-time index, but BSE-500 would be on-line, Damani said. Explaining the reason for launching a new index of 500 stocks, he said Standard and Poor's had indices for both 100 and 500 stocks and BSE-500 would provide a broader base for investors to measure the state of the market.

The BSE president said the stocks in the new index would be taken after subjecting them through various parameters and checks. The stocks would be tested for adequate liquidity, a healthy market depth and it would be ensured that the volatility is not too high.

 

The BSE would also pick them on the basis of the quality of management which is being done for the first time.

The frequency of dividend payment and the profitability of a company are also going to be considered for inclusion in BSE-500, Damani said.

Though the BSE has revamped the BSE Sensex recently, and included more sectors and highly traded stocks, it is generally felt that an index with around 500 stocks can measure market movements better than an index with fewer stocks.

The BSE president said the BSE-500 would obviously contain the Sensex and BSE-100 stocks, but would aim to go beyond that by including many other quality stocks drawn from both the A, B1 and B2 groups.

Those with a broader based portfolio would also be in a better position to judge the market movements through BSE-500, he said.

The exchange had recently revamped the BSE National index of 100 stocks since earlier BSE used to take the prices of certain scrips or the weighted average of some scrips which were popular on other exchanges in order to reflect market movements at the national level.

But changes in trading technology, longer trading periods and instant availability of information had ensured there is little or no price difference in the stocks.

Therefore, the BSE National was also renamed BSE-100.