The value of the BSE Sensex is calculated using a free-float market capitalization-weighted methodology, which takes into account the market capitalisation and free-float factor of its constituent stocks. The formula used for the computation of the BSE Sensex’s value is as follows:
Index Value = (Total Free Float Market Capitalisation / Base Market Capitalisation) x Base Index Value
Here, total free float market capitalisation is the average market capitalisation of all 30 stocks in the index, base free-float market capitalisation is the average market capitalisation of the stocks in BSE Sensex on 3rd April 1979, and the base index value is the value of the BSE Sensex as on the base date.