The formula for adjusting the Base Market capitalization is as follows:
New Base Market capitalization = Old Base Market Capitalization x New Market Capitalization / Old Market Capitalization
To illustrate, suppose a company issues right shares, which increases the market capitalization of the shares of that company by say, Rs.100 crores. The existing Base Market capitalization (Old Base Market capitalization), say is Rs.2450 crores and the aggregate market capitalization of all the shares included in the index before the right issue is made is, say Rs.4781 crore. The “New Base Market capitalization” will then be:
New Base Market capitalization = 2450 x (4781 + 100) / 4781 = Rs.2501.24 cr
This figure of Rs.2501.24 crore will be used as the Base Market capitalization for calculating the index number from then onwards till the next base change becomes necessary
New Base Market capitalization = Old Base Market Capitalization x New Market Capitalization / Old Market Capitalization
To illustrate, suppose a company issues right shares, which increases the market capitalization of the shares of that company by say, Rs.100 crores. The existing Base Market capitalization (Old Base Market capitalization), say is Rs.2450 crores and the aggregate market capitalization of all the shares included in the index before the right issue is made is, say Rs.4781 crore. The “New Base Market capitalization” will then be:
New Base Market capitalization = 2450 x (4781 + 100) / 4781 = Rs.2501.24 cr
This figure of Rs.2501.24 crore will be used as the Base Market capitalization for calculating the index number from then onwards till the next base change becomes necessary
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