What is BSE IPO – Meaning & Calculation

Investors often need to track the performance of previously listed companies on the BSE. Besides examining the performance of companies one by one, it is better to observe an index. The BSE IPO index allows investors to track the performance of many S&P companies. Investors also make informed decisions with the help of the BSE IPO index. Continue reading to understand the BSE IPO in detail.

Understand BSE IPO Index?

BSE IPO or S&P BSE IPO is a strategy index launched and managed by the Bombay Stock Exchange . The index tracks the performance of several S&P companies listed on the BSE. Companies in this index are the ones that have launched their IPOs on BSE in the past. Since many companies have launched their IPOs on BSE in the past, not all of them are included in the index.

It includes stocks of around 54 companies in 14 different industry sectors. BSE launched this index on the 24th of August 2009 with a base value of 1000. Over the years, the value of the S&P BSE index has increased. It highlights that the companies included in the index have performed well over the years.

How is the BSE IPO Index Calculated?

Before you check the BSE IPO allotment status, it is essential to analyse the performance of different companies through the BSE IPO index. The index allows you to analyse the performance of companies listed on the BSE. You can predict the performance of new companies launching their IPO on BSE with the help of this index. It follows a definite strategy for weighting each stock.

All 54 participants in the index are weighted based on the free-float market cap. The free-float market cap of a company includes shares available for trading. It does not include shares held by insiders and promoters, as these aren’t available for trading. Also, it puts a cap/limit on the free-float market cap of some companies. It is done to ensure that no single stock dominates the entire IPO index. Companies included in the index have a free-float market capitalisation of INR 100 crores or above. If the free-float market cap is less than 100 crores on the third day of listing on BSE, it will not be included in the index.

Recommended Read: Understand BSE Small Cap

The value of the BSE IPO index can be calculated by dividing the index market value by the divisor. In this formula, the index market value = shares * price * free-float factor * additional weight factor. The motivation for using a divisor for index calculation is taken from the S&P Dow Jones indices. You can find the divisor’s value by dividing the market value after rebalancing by the index value before rebalancing. BSE calculates the index value on its own and publishes it for investors around the country.

How to Invest in the BSE IPO Index?

It only tracks the performance of the included 54 stocks. Investors can analyse the performance of 54 stocks with the help of this index. Even though you cannot invest directly, you can replicate its performance. You can include the top-performing stocks of the BSE IPO index in your portfolio. You can also invest in collective investment schemes that track the performance.

Investors can also invest in new companies launching their IPOs on BSE. Companies can launch their IPOs on a stock exchange in India to become a public company. You can use a trading platform to check the list of companies launching their IPOs on BSE at present. You can submit your IPO applications to such companies within the given subscription period. Don’t forget to check your BSE IPO allotment status after applying.

Benefits of Investing in the BSE IPO Index

Let us discuss the benefits of investing with the help of the IPO index or choosing associated financial products.

S&P BSE IPO index is one of the best-performing indices in the country. It has even outperformed the popular BSE 500 index. It has performed well in the past few years. All 54 stocks of the index have grown in value over the years. As you already know, it had a base value of 1000 but has now gone past 12,000. You can earn high returns by tracking or replicating the performance of the BSE IPO index.

Since the index is managed by BSE, you don’t have to worry about reliability. BSE is a well-known stock exchange that has provided accurate information to investors for many years. Also, the BSE IPO index is updated regularly to help you make the right investment decisions.

Recommended Read: What is National Stock Exchange?

Conclusion

The BSE IPO index is a reliable benchmark for analysing the performance of top stocks on the BSE. The index consists of 54 stocks belonging to different industry sectors. You can track the performance of the index for high returns. Associated financial products might also be available for investors interested in this. . Check the BSE IPO price now!

 



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