SHARE%20PRICE%20INDEX%20OF

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SHARE PRICE INDEX OF THE KARACHI STOCK EXCHANGE
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WHAT IS AN INDEX
The primary objective of the Index is to have a
benchmark by which the stock price performance
can be compared to over a period of time. In
particular, it is designed to provide investors
with a sense of how the market is performing.
Thus, it is similar to other indicators that
track various sectors of the economic activity
such a the gross national product, consumer price
index, etc. Some major international indices
are NYSE, FTSE (London), NZSE 40, SENSEX 30
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KSE 100 INDEX
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BRIEF INTRODUCTION
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KSE 100 INDEX
On November 1, 1991 the KSE 100 Index was
introduced. It is capital weighted index and
consists of 100 companies representing about 86
of market capitalization of the Exchange. In
November 1994 it was recomposed by the Baring
Securities London and rules were framed for its
re-composition.
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• ON - LINE COMPUTATION OF THE INDEX
• During market hours, prices of the Index scrips,
  at which trades are executed, are automatically
  used by the trading computer to calculate the
  KSE-100 Index and continuously make up-dation on
  all trading workstations connected to the KSE
  trading computer on real time basis.
• The KSE 100 Index re-composed on semi-annually
  basis

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SELECTION CRITERIA
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SELECTION CRITERIA
The selection criteria for stock inclusion in the
recomposed KSE 100 Index are SECTOR
RULE Largest market capitalization in each of
the 34 sector of the Exchange, excluding Open
end Mutual Fund sector CAPITALIZATION
RULE The remaining 66 companies are taken up on
the basis of market capitalization companies in
descending order.
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SELECTION CRITERIA
A number of the 34 top sector companies may also
qualify for inclusion on the basis of their
market capitalization i.e. companies may qualify
under Sector Rule or under Capitalization Rule,
or under both. However, in that case the company
shall be included on the basis of Sector Rule.
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SELECTION CRITERIA
LIST OF SECTOR
Close-end Mutual Fund
Modaraba
Leasing Companies
Inv. Banks / Inv. Cos. / Sec. Cos
Commercial Banks
Insurance
Textile Spinning
Textile Weaving
Textile Composite
Woollen
Synthetics Rayon
Jute
Sugar Allied
Cement
Tobacco
Refinery
Power Generation Distribution
Oil Gas Marketing Companies
Oil Gas Exploration Companies
Engineering
Automobile Assembler
Automobile Parts Accessories
Cables Electric Goods
Transport
Technology Communication
Fertilizer
Pharmaceutical
Chemical
Paper Board
Vanapati Allied
Leather Tanneries
Foods Personal Care Products
Glass Ceramics
Miscellaneous
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SELECTION CRITERIA
SECTOR RULE Value-based Rule A company which
is the largest in its sector by a minimum of 10
in capitalization than the present largest in the
sector (in the index) will enter in the index on
re-composition. Time-based Rule A company which
is the largest, but not more than 10 greater in
value than the present largest company in the
sector will enter the index after maintaining its
position as largest in the sector for two
consecutive re-composition period.
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SELECTION CRITERIA
CAPITALIZATION RULE Time-based Rule A company
may qualify for entry if it exceeds the market
capitalization of the last stock in the index
selected on the basis of market capitalization
for two re-composition periods. A qualifying
company automatically pushes out the lowest
capitalization selected stock in the index.
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SELECTION CRITERIA
RULES FOR NEW ISSUES A newly listed company or
a privatized company shall qualify to be included
in the existing index (on day of recomposition)
if the market capitalization of the new or
privatized company is at least 2 of the total
market capitalization.
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SELECTION PROCESS
An over-view
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SELECTION PROCESS SECTOR RULE
VALUE BASE
Companies largest in its Sector by a minimum 10
at the last cut off date.
TIME BASE
Companies which are greater but less than 10.
INDEX
SECTOR BUFFER Companies will enter the Index
after maintaining its position for last Two cut
off dates.
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SELECTION PROCESS CAPITALIZATION RULE
TIME BASE
Companies which are amongst the top 66 companies
on market capitalization basis.
MARKET CAP. BUFFER Companies will enter the Index
after maintaining its position for last Two cut
off dates.
INDEX
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CALCULATION OF KSE 100
Hypothetical Example Step 1 The Base Period Day 1
Stock Share Price (Rs.) No. of Shares Market Value (Rs.)
A 20.00 50,000,000 1,000,000,000.00
B 30.00 100,000,000 3,000,000,000.00
C 40.00 150,000,000 6,000,000,000.00
Total Market Capitalization Total Market Capitalization Total Market Capitalization 10,000,000,000.00
Note Base Period Value / Base Divisor
Rs.10,000,000,000.00 1000.00
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CALCULATION OF KSE 100
Step 2 Index Value as on Day 2
Stock Share Price (Rs.) No. of Shares Market Value (Rs.)
A 22.00 50,000,000 1,100,000,000.00
B 33.00 100,000,000 3,300,000,000.00
C 44.00 150,000,000 6,600,000,000.00
Total Market Capitalization Total Market Capitalization Total Market Capitalization 11,000,000,000.00
11,000,000,000.00 Index
-------------------------- 1.10 1000
1100 10,000,000,000.00
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CALCULATION OF KSE 100
The for Calculating the KSE 100 Index is
Sum of Shares Outstanding x Current
Price -------------------------------------------
---------------- x 1000 Base Period Value
OR
Market Capitalization --------------------
--------------------------------------- x
1000 Base Divisor
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YEAR-WISE PERFORMANCE SINCE INCEPTION
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EVENT-WISE RISE FALL
CFS Implementation 25 Bn
Improvement in Indo-Pak Relations
Indo-Pak Tension
Settlement Crisis
Improving Economy
New Economic Agenda
CVT Levy
Change of Regime
Terrorists Attack in US (9/11)
Nuclear Tests
SP upgraded rating
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TOP 10 INDEX WEIGHTAGE COMPANIES
COMPANY NAME INDEX WEIGHTAGE
O. G. D. C. 23.82
P. T. C. L. A 7.30
Pakistan Petroleum Limited 6.50
National Bank of Pakistan Limited 6.48
MCB Bank Limited 4.27
United Bank Limited 3.29
Pakistan Oilfields Limited 2.89
Fauji Fertilizer Company Limited 2.20
Pakistan State Oil Company Limited 2.03
Sui Northern Gas Pipelines Limited 1.93
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TOP 10 INDEX WEIGHTAGE COMPANIES of BSE SENSEX 30
COMPANY NAME INDEX WEIGHTAGE
INFOSYS TECHNOLOGIES 9.50
RELIANCE 8.86
ICICI BANK 7.61
ITC LTD 7.44
HDFC 4.35
HINDUSTAN LEVER 4.35
LARSEN TOUBRO 4.35
ONGC 4.07
TELEVENTURES 3.97
SATYAM COMPUTERS 3.59
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FUTURE PLANS

• INTRODUCTION OF KSE-30 INDEX
• The primary objective of the KSE-30 Index is to
  have a benchmark by which the stock price
  performance can be compared to over a period of
  time. In particular, the KSE-30 Index is designed
  to provide investors with a sense of how large
  companys scrips of the Pakistans equity market
  are performing. Thus, the KSE-30 Index will be
  similar to other indicators that track various
  sectors of countrys economic activity such as
  the gross national product, consumer price index,
  etc.
• Globally, the Free-float Methodology of index
  construction is considered to be an industry best
  practice and all major index providers like MSCI,
  FTSE, SP, STOXX and SENSEX have adopted the
  same. MSCI, a leading global index provider,
  shifted all its indices to the Free-float
  Methodology in 2002

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THANK YOU