The BSE 200, also known as the S&P BSE 200, is a stock market index on the Bombay Stock Exchange (BSE) that tracks the performance of the top 200 companies listed on the exchange, included based on their market capitalisation and liquidity. It includes companies from various sectors such as finance, technology, consumer goods, and industrials.

The BSE 200 index includes both large-cap and mid-cap companies, making it a balanced index that reflects the performance of the broader market. It is reviewed semi-annually and rebalanced to ensure it remains representative of the market.

The BSE 200 index is calculated using a free-float market capitalisation method, considering only the shares available for public trading. To calculate the BSE 200 index, the free-float market capitalisation of each constituent company is determined and aggregated.

The formula is: BSE 200 Index = (Sum of Market Capitalisation of Constituent Stocks) / (Base Market Capitalisation) × (Base Index Value).

The selection of stocks is based on liquidity, market capitalisation, and trading frequency. For example, if Company A has a free-float market capitalisation of Rs. 7,000 Cr and Company B has Rs. 3,000 Cr, their weights in the index would be proportionate to these values.

The primary objective of the BSE 200 index is to provide a comprehensive and reliable benchmark that reflects the performance of the top 200 companies listed on the Bombay Stock Exchange. It aims to represent the overall health and trends of the Indian stock market, offering investors a diversified and balanced view.

One of the key goals is to facilitate investment decisions by tracking the performance of 200 leading companies. The index also aims to promote market transparency and efficiency through regular reviewing and rebalancing, while attracting both domestic and international investors with a reliable and comprehensive market indicator.