The Exchange has since January 1984 published a stock exchange index. The index is an aggregate of the market capitalisation of all of the industrial equities listed in the market. The computation of the index is explained below:
The NSE Index is given by the formula:
Current Market Value
--------------------------- x 100
Base Market Value
or CMV
------ x 100
BMV
n
å
i=1Pa Qa
= ------------ x 100
n
å Pb Qb
i=1
where
Pa = Current market price of an ordinary share as at the base
Qa = Current number of listed ordinary shares.
Pb = Market price of an ordinary share as at the base date.
Qb = Number of listed shares as at the base date.
= 1, 2, ...n
= Number of constituents in the index.
Where changes other than price variations occur which affect the index, an adjustment is made in order to eradicate the effects of such changes.
Such adjustment is designed to make the Index after the changes equal to the Index before the changes. The changes envisaged here include new listings, delistings, and increase in the issued capital of listed companies. The procedure for effecting the adjustment is as follows:
CMV CMVo
------ =
--------
BMV
BMVo
where:
CMV = Current market value after the change
BMV = Base market value after the change
CMVo = Old current market value
(i.e. before the change)
BMVo = Old base market value
(i.e. before the change)
The new base market value is obtained as follows:
BMV
=
BMVo
x
CMV
------
CMVo
In applying the above formula to a situation where there is a new listing, we have the following expression:
BMV
=
BMVo
x
CMV
------
CMVo
where:
BMV = Base make value after the adjustment to
take account of the new listing
CMV = Current market value including the value of new shares.
BMVo = Old base market value
CMVo = Old current market value
The base adjustments are made on the day the new securities are listed.
In a situation where there is a delisting, the formula is explained thus:
BMV = Base market value after the adjustment to exclude the shares delisted.
CMV = Current market value after deduction of the value of shares withdrawn.
BMVo = Old base market value
CMVo = Old current market value
The adjustment to the Base Market Value is made on the date the securities are delisted and the adjusted Index becomes the new base as from the following day.
In the case of a Listed Company increasing its issued capital, the formula is explained thus -
BMV = Base market value after adjustment
CMV = Current market value
BMVo = Old base market value
CMVo = Current market value excluding value of rights
In the case of capital increase through the grant of pre-emptive rights to existing shareholders, the adjustment is made on the ex-rights date. If rights were however granted to other persons such as the general public, company directors, employees, etc., the adjustment is made on the date the new shares are registered or listed on The Nigerian Stock Exchange. If there is no transaction in either case on the said date, the adjustment is made on the day transaction first takes place after the rights. |
