How are points in a stock exchange calculated?

Points or index refers to a figure indicative of the health of the stock market. The most widely used index is sensex or sensitive index which is based on weighted value of 30 numbers of most traded shares in the Mumbai stock exchange. Each stock has a percentage share in a total of 100 and affects the value of the sensex accordingly. Similarly, Nifty is the index of 100 selected stocks which are most traded.

Nifty is actually an index of 50, not 100, stocks. Also, sensex is calculated on free-float market cap only i.e. shares held by the public and not by promoters. But, Nifty is calculated by total market capitalisation. Hence, shares like ONGC where the promoter holding is large gets very little weight in the sensex as compared to the Nifty.