Hey folks I have come up with my own index...i noticed several shortcomings with the NSE20 which is a market cap weight index, one of the things I noticed EABL & Safcom influence the index heavily while the banking sector has little influence thus it does not represent the true picture of the market.

The Nairobi20 Stock Index is a price weighted index

The Nairobi20 stock Index is made up of Safaricom, Jubilee, Equity Bank, Standard Chartered, Barclays, Sasini, KCB, Kenya Power, Kenol, KQ, TPS, Centum, Williamson Tea, BAT, CMC, Mumias, EABL, Uchumi, Bamburi and NMG.

The Nairobi20 Stock index closed at 77.05 yesterday.

It will be tracked at http://contrarianinvestingkenya.info

The NSE-20 is equi-weighted

NSE-20 is NOT capitalisation-weighted. It is a simple price index without any weighting.

Check with the NSE for the formula and you will see for yourself.

Yaani all stocks are given equal weight.

Here is the formula from the NSE booklet I downloaded in 2009:

I[t] = I[t-1] * 20th-root-of ({P[1 t]/P[1 t-1]} * {P[2 t]/P[2 t-1]} * .... * {P[20 t]/P[20 t-1]})

Where:

I[t] = index at time t
I[t-1] = index at time t-1
P[j t] = price of stock j (i.e., 1, 2, 3, 4, .... 20) at time t

P[j t-1] = price of stock j at time t-1

You see it is just an average of prices. There is no mention of capitalisation.

Unfortunately, this booklet is not available in the new-look NSE website, otherwise I'd have given you the link.

Now go check you facts and let's compare.