How KSE 100 Index is calculated

This is an index of market prices of a particular group of stocks such as the #KSE shares. It was introduced in November, 1999 with a base value of 1000 points. The index is comprised of 100 companies selected on the basis of sector representation and highest market capitalization, which represent around 80 percent of the total market capitalization of the companies listed on the Stock Exchange. A list of 34 sectors have been selected by the KSE, i.e one company from each sector (excluding open ended funds as such total sectors are 35) on the basis of largest market capitalization. The remaining 66 companies are selected on the basis of largest market capitalization in descending order.

Now we shall discuss the formulas for calculating the KSE 100 share index. To make the computation simple, the total market value of the base period has been adjusted to 1000 points. Thus, the total market value of the base period has been assigned a value of 1000 points.

The KSE 100 Index calculation at any time involves the same multiplication of share price and share outstanding for each of the KSE 100 Index component stocks. The aggregative market values are devided by the base value and multyiplication by 1000 to arrive the current index numbers.

Thus, the KSE 100 is similar to other indicators that track various sectors of the Pakistan economic activity such as the gross national product, consumer price index, etc.

Example of calculating KSE 100 Index. (Day 1)

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• Stock: A
• Share Price Rs. : 10 
• Numbers of Shares: 50,000,000
• Market Value: 500,000,000

• Stock: B
• Share Price Rs. : 20 
• Numbers of Shares: 100,000,000
• Market Value: 2000,000,000

• Stock: C
• Share Price Rs. : 30 
• Numbers of Shares: 150,000,000
• Market Value: 4500,000,000

Total Market Value is 7,000,000,000

Base period value / base divisor = 7,000,000.000 = 1000

Example of calculating KSE 100 Index. (Day 2)

• Stock: A
• Share Price Rs. : 12 
• Numbers of Shares: 50,000,000
• Market Value: 600,000,000

• Stock: B
• Share Price Rs. : 23
• Numbers of Shares: 100,000,000
• Market Value: 2300,000,000

• Stock: C
• Share Price Rs. : 34 
• Numbers of Shares: 150,000,000
• Market Value: 5100,000,000

Total Market Value is 8,000,000,000

Day 2 index 8000,000,000 / 7,000,000,000 * 1.143 x 1000 = 1143

From the above example formulas for calculating share price index are given below:

Sum of shares outstanding X Current price / Base Period Value X 1000

or

Market Capitalization / Base divisor X 1000