How is P/E of SENSEX calculated???

SENSEX P/E Ratio can be calculated in the same way as a company's P/E ratio is calculated.
The steps can be like this:

1. Divide Total Market Cap of Sensex Constituents by the total number of outstanding shares of the constituents. This will provide the numerator of the P/E ratio, i.e., price per share.
2. Similarly, total the trailing earnings of all the constituents and divide the resultant sum once again with the total number outstanding shares of the constituents to get EPS, the denominator.
3. Divide the numerator/denominator and you have the Sensex P/E ratio in hand.

A short-cut method is:

P/E = Market Cap/Total Earnings

Regards
Praveen Kumar
www.laymansfinance.blogspot.com

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