S & P CNX 500 - Security Analysis and Investment Management

It is a broad based index consisting of 500 scrips. The companies are selected on the basis of their market capitalization, industry representation, trading interest and financial performance. The market capitalization is used as weights. The companies influence on the index depends upon their market capitalization. The companies selected are either leaders or representative of their industries. They should reflect the movement of their industry. The industry groups included in the S & P. CNX 500 are 79. The number of representation from each industry group is changed to reflect the market. The selected companies should have minimum record of three years of operation with positive net worth. The base year is 1994 because it is considered to be closer the post liberalization era. Since the index is a broad based one, it represents 72 per cent of the total market capitalization and 98 per cent of the total traded value.

As it is weighted with market capitalization, it mirrors the market movement more effectively. The broad base of the index provides a bench mark for comparing portfolio return with market return.


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