1. Kallol Kumar Sarkar B.Com(Hons.- Accounting & Finance) St.Xaviers college, Kolkata MBA-Finance (IMT-Nagpur) Credit Analyst, Magma Fincorp Ltd. www.evolutionxpress.blogspot.in KallolSarkar698@gmail.com

2. Introduction Based on 25 stocks from 11 sectors Index shows the movement of the sectors and overall stock market performance mark to market Base date is taken as on 11-10-2013, and the base price of each stock is the closing price as on 11-10-2013 The calculation of index involves the market performance and investor confidence

3. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Stocks & Sectors L&T ONGC TATA MOTORS SBI HDFC IBL ICICI Bank LUPIN CIPLA INFOSYS TCS MINDTREE DLF ECLERX MAHINDRA & MAHINDRA TATA STEEL ASHOK LEYLAND ASIAN PAINTS BERGER PAINTS MAGMA FINCORP HCL TECHNOLOGIES ZEE ENTERTAINMENT GODREJ INDUSTRIES MAHINDRA & MAHINDRA FINANCAL SERVICES BPCL 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Oil & Gas Manufacturing BFSI NBFC Pharmacy Construction Paints KPO Conglomerate IT Media

4. Calculation

5. 6.35 Evolution Index 25 Evolution Index 25 6.32 6.30 6.29 6.26 6.25 6.25 6.20 6.15 6.14 6.10 6.05 6.00 Base Price (11-10-2013) 14-10-2013 15-10-2013 17-10-2013 18-10-2013

6. PERFORMANCE OF INDEX IN THE PAST WEEK 8.78% 5.79% 4.78% 3.43% 2.89% 2.21% 1.84% 1.54% 1.39% -0.45% -0.45% 0.52% -0.30% -0.32% -0.22% 1.22% -1.27% -1.54% -3.11% -4.90% -3.13% -3.23% -4.26% -5.20% -8.93%

7. Evolution Index 25 25 stock from 11 sectors are chosen The CMP of each stock as on BSE are recorded Summation of the 25 stock gives the Total value of the index. The index is calculated as, (Total Value of Index/ Avg. price of the 25 stocks past week) This brings into consideration the investor sentiment too. If the investor sentiment or confidence is low then it will be reflected in the Total index value. Again if the confidence was low, but has improved now then the index would improve as the denominator would be less and the numerator is more

8. Example Let avg. price of 25 stocks in week 0 is 3200. Total Value of index in week 1 day 1 is 18000, week 1 day 2 is 18300, week 1 day 3 is 19500, week 1 day 4 is 19200, week 1 day 5 is 19660. Then the index value is: Week 1 day 1 is (18000/3200)= 5.63 Week 1 day 2 is (18300/3200)= 5.72 Week 1 day 3 is (19500/3200)= 6.10 Week 1 day 4 is (19200/3200)= 6.00 Week 1 day 5 is (19660/3200)= 6.14 For the basis of calculation of Week 2, the avg. price of 25 stocks is, (18000+18300+19500+19200+19660)/25 = 3786.4 So, for index value of Week 2 days, the total value index must be divided by 3786.4.

9. Assumptions Base date is 11-10-2013 The avg. of 25 stocks for the 1st week is taken from 14-10-2013 to 18-10- 2013. The value of the index is calculated for that tenure is based on the avg. price of 25 stocks as on 18-10-2013 For the calculation of index from 21-10-2013, the avg. price of 25 stocks would be based on previous week

10. Benefits Investor confidence is factored in. Since the value of week 0 would impact the index value of the days in week 1 and so on. So, there is always a linkage between every week. Time value is factored, since the denominator is changing w.r.t to the stock price movement. The price of the stock always tries to match up with the DCF technique, so the TV is playing the role in the long run. Specifically the linkage between every week in the form of changing denominator is designed because, if the index attains a value of say 7 today, and the index attains the value 7 in 2015 then both must denote same meaning and value. Unlike the SENSEX attaining 21000 points in 2008 was at its all time high where Indias GDP was also good. But now again the SENSEX is at 20,882 but GDP is at a low of 5% and other economic problems are showing up. So the same index with almost same value is depicting different pictures of India.

11. Your comments and views are most welcome KallolSarkar698@gmail.com www.evolutionxpress.blogspot.in