What is Nifty ?

S&P CNX Nifty

The Standard & Poor's CRISIL NSE Index 50 or S&P CNX Nifty nicknamed Nifty 50 or simply Nifty (NSE: ^NSEI), is the leading index for large companies on the National Stock Exchange of India

S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds.

S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialised company focused upon the index as a core product. IISL has a Marketing and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services.

• The average total traded value for the last six months of all Nifty stocks is approximately 62.45% of the traded value of all stocks on the NSE
• Nifty stocks represent about 63.98% of the total market capitalization as on Jan. 30, 2009.
• Impact cost of the S&P CNX Nifty for a portfolio size of Rs.2 crore is 0.16%
• S&P CNX Nifty is professionally maintained and is ideal for derivatives trading

Nifty components

The list of constituents of S&P CNX Nifty as on September 27, 2007 along with the Market capitalization details and weightages is as follows:

Company name	Market Capitalization (Rs. Crores)	Weightage
Reliance Industries	323057	11.710
Oil and Natural Gas Corporation of India	208059	7.50
Bharti Airtel	182208	6.59
NTPC	159921	5.79
Reliance Communications	119109	4.31
ICICI Bank	112542	4.07
Infosys Technologies	109435	3.96
Tata Consultancy Services	103977	3.76
BHEL	99874	3.61
State Bank of India	98981	3.58
Steel Authority of India	83042	3.01
Larsen & Toubro	81216	2.94
ITC	69786	2.53
Reliance Petroleum Ltd.	67928	2.46
HDFC	67878	2.46
Wipro	67183	2.43
Sterlite Industries Ltd.	53884	1.95
HDFC Bank	50619	1.83
Tata Steel	48413	1.75
Hindustan Unilever	48318	1.75
Suzlon Energy	41746	1.51
GAIL India	32029	1.16
Grasim Industries	31526	1.14
Tata Motors	28960	1.05
Maruti Udyog	28318	1.02
ABB	27244	0.99
Power Grid Corporation of India
Reliance Energy	25530	0.92
Siemens	22786	0.82
ACC	22278	0.81
Ambuja Cements	21995	0.80
HCL Technologies	20340	0.74
Hindalco Industries	20163	0.73
National Aluminium Co.	19896	0.72
Reliance Capital Ltd.	12739	0.70
Sun Pharmaceuticals Ind.	18784	0.68
Mahindra & Mahindra	18463	0.67
Tata Power	17494	0.63
Punjab National Bank	16829	0.61
Ranbaxy Labs	15675	0.57
Hero Honda Motors	14877	0.54
Zee Entertainment	14134	0.51
Indian Petrochemicals Corporation	13879	0.50
Cipla	13680	0.50
Bharat Petroleum Corporation	13135	0.48
Videsh Sanchar Nigam Limited	12697	0.46
Dr. Reddy's	10894	0.39
Mahanagar Telephone Nigam Limited	10342	0.37
GlaxoSmithKline Pharma	9486	0.34

What Is Sensex ?

BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks started in 01 of jan, 1986. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE. The base value of the sensex is 100 on April 1, 1979, and the base year of BSE-SENSEX is 1978-79.

At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to make sure it reflects current market conditions. The index is calculated based on a free-float capitalization method; a variation of the market cap method. Instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by company insiders

List of Companies in Sensex:-

(As of January 12, 2009)

Code	Name	Sector	Adj. Factor
532174	ICICI Bank	Finance	1.00
500510	Larsen & Toubro	Capital Goods	0.90
500010	HDFC	Finance	0.85
500180	HDFC Bank	Finance	0.85
500209	Infosys	Information Technology	0.85
500300	Grasim Industries	Diversified	0.75
500520	Mahindra & Mahindra Limited	Transport Equipments	0.75
500400	Tata Power	Power	0.70
500440	Hindalco Industries	Metal, Metal Products & Mining	0.70
500470	Tata Steel	Metal, Metal Products & Mining	0.70
500875	ITC Limited	FMCG	0.70
500390	Reliance Infrastructure	Power	0.65
500570	Tata Motors	Transport Equipments	0.65
532532	Jaiprakash Associates	Housing Related	0.60
500410	ACC	Housing Related	0.55
500325	Reliance Industries	Oil & Gas	0.50
500696	Hindustan Lever Limited	FMCG	0.50
532500	Maruti Udyog	Transport Equipments	0.50
500112	State Bank of India	Finance	0.45
500359	Ranbaxy Laboratories	Healthcare	0.40
500900	Sterlite Industries	Metal, Metal Products, and Mining	0.40
524715	Sun Pharmaceutical Industries	Healthcare	0.40
500103	BHEL	Capital Goods	0.35
532454	Bharti Airtel	Telecom	0.35
532712	Reliance Communications	Telecom	0.35
532540	Tata Consultancy Services	Information Technology	0.25
500312	ONGC	Oil & Gas	0.20
507685	Wipro	Information Technology	0.20
532555	NTPC	Power	0.15
532868	DLF Universal Limited	Housing related	0.15

Debts Ratio & Market Ratio

Debt Ratio:-

Debt ratios measure the firm's ability to repay long-term debt. Debt ratios measure financial leverage.

• Debt ratio:-

Total Liabilities

Total Assets

• Debt to equity ratio:-

Long-term Debt + Value of Leases

Average Shareholders Equity

• Long-term Debt to equity:-

Long-term Debt

Total Assets

• Times interest-earned ratio:-

EBIT

Anual Interest Expenses

OR

Net Income

Annual Interest Rate

• Debt service coverage ratio:-

Net Operating Income

Total Debt Service

Market Ratios:-

Market ratios measure investor response to owning a company's stock and also the cost of issuing stock.

• Earnings per share (EPS):-

Expected Earnings

Numbers of Shares

• Payout ratio:-

Dividends

Earnings

OR

Dividends

EPS

• P/E ratio:-

Market Price Per Share

Diluted EPS

• Cash flow ratio:-

Market Price Per Share

Present Value of Cash Flow per Share

• Price to book value ratio (P/B or PBV):-

Market Price Per Share

Balance Sheet Price per Share

• Price/sales ratio:-

Market Price Per Share

Gross Sales

• PEG ratio:-

Price per Earnings

Annual EPS Growth

Liquidity Ratio & Activity Ratio

Liquidity Ratio:-

Liquidity ratios measure the availability of cash to pay debt.

• Current ratio:-

Current Assets

Current Liabilities

• Acid-test ratio (Quick ratio):-

Current Assets – ( Inventories + Prepayments )

Current Liabilities

• Operation cash flow ratio:-

Operation Cash Flow

Total Debts

Activity ratios:-

Activity ratios measure the effectiveness of the firms use of resources.

• Average collection period:-

Accounts Receivable

Annual Credit sales / 365 Days

• Degree of Operating Leverage (DOL):-

Percent Change in Net Operating Income

Percent Change in Sales

• DSO Ratio:-

Accounts Receivable

Total Annual Sales / 365 Days

• Average payment period:-

Accounts Receivable

Total Credit Purchage / 365 Days

• Asset turnover:-

Net Sales

Total Assets

• Inventory turnover ratio:-

COGS

Average Inventory

• Receivables Turnover Ratio:-

Net Credit Sales

Average Net Receivables

• Inventory conversion ratio:-

365 Days

Inventory Turnover

• Inventory conversion period:-

(Inventory/COGS) 365 Days

• Receivables conversion period:-

( Receivables / Net Sales ) 365 Days

• Payables conversion period:-

( Purchases /Accounts Payable ) 365 Days

• Cash Conversion Cycle:-

Inventory Conversion Period + Receivables Conversion Period - Payables Conversion Period

Profitability Ratio

Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return.

• Gross margin, Gross profit margin or Gross Profit Rate:-

Gross Revenue

Net sales

OR

Net Sales-COGS

Net Sales

• Operating margin, Operating Income Margin, Operating profit margin or Return on sales (ROS):-

Operating Income

Net Sales

• Profit margin, net margin or net profit margin:-

Net Income

Net Sales

• Return on equity (ROE):-

Net Income

Average Shareholders Equity

• Return on investment (ROI ratio or Du Pont ratio):-

Net Income

Average Owners Equity

• Return on assets (ROA):-

Net Income

Total Assets

• Return on assets Du Pont (ROA Du Pont):-

(Net Income / Net Sales ) x (Net Sales / Total assets )

• Return on Equity Du Pont (ROE Du Pont):-

( Net Income / Net Sales ) x ( Net Sales / Average Assets ) x (Average Assets/ Average Equity )

• Return on net assets (RONA):-

Net Income

Fixed Assets + Working Capital

• Return on capital (ROC):-

Net Operating Profit – Adjusted taxes

Owners Equity

• Risk adjusted return on capital (RAROC):-

Expected Return

Economic Capital

OR

Expected Returns

Value of Risk

• Return on capital employed (ROCE):-

Net Income

Capital Employed

• Cash flow return on investment (CFROI):-

Cash Flow

Market Recapitalisation

• Efficiency ratio:-

Non-Interest Income

Net-Interest Income -Non-Interest Income