Come September, the Bombay Stock Exchange's sensitive index -- the Sensex -- will shift to free float from the present practice of assigning weights in the 30-scrip basket on the stocks' full market capitalisation.

In the full capitalisation market system, the total market capitalisation of a company -- irrespective of the holding pattern -- is taken into consideration while computing the index.

However, Sensex's shift from the full market capitalisation system to the free float system from September will have little impact on the weightages of the Sensex scrips.

Indeed, the weightages of the top 10 BSE scrips will almost remain unchanged in the free float system, going by the prices of these stocks on June 30 (at the end of the first quarter).

These stocks currently have a 67.51 per cent weightage in the Sensex. They will now account for a 67.72 per cent weightage in the free-float system.

In the full market capitalisation system, the total market capitalisation of a company, irrespective of who is holding the shares, is taken into consideration for computing an index.

But the free float system is based on the market capitalisation of shares that can be traded in the market.

It excludes promoters' holdings, government holdings, strategic holdings and other locked-in shares which are not normally traded in the market.

In free float method, the weightages of Reliance Industries, Hindustan Lever, State Bank of India and HPCL are likely to decline by between 1-3 percentage points.

These decline will, however, be made good by increases in the weightages of Infosys Technologies (whose weightage in the Sensex will go up by 1.72 percentage points), HDFC (up by 1.84 percentage points) and ICICI Bank (up 1.70 percentage points).

The Ranbaxy Laboratories, Dr Reddy's Laboratories and ITC scrips too will see a minor increase in their weightage.

There will be a minor reshuffling in the weightage of the bottom 20 stocks which have a 32 per cent weightage in the old as well as the free-float Sensex.

The weightage of PSU stocks and companies where the promoters' holdings are substantially high will drop. So the losers will be MTNL, BHEL, Hero Honda, HCL Technologies and Zee Telefilms.

The gainers will be Tata Steel, Satyam Computer, Bajaj Auto, Larsen & Toubro and Grasim Industries.

BS Research Bureau compiled the free float Sensex from July 1.

The full market capitalisation was calculated on the basis of outstanding shares of Sensex companies on June 30, 2003. The free-float factors -- provided by the BSE -- were then applied.

The base period weightage was changed as per the methodology to compile the free-float Sensex.

The results are not surprising. The daily fall or rise in the Sensex, whether in the earlier system or in the free-float system, remain almost the same.

However, the Sensex calculated on a free-float basis would have been at 3,667.76 on July 18, 20 points higher than the Sensex close of 3,647.58 on same day.

Globally, the free-float methodology of index construction is considered to be an industry best practice and all major index providers like Morgan Stanley Capital Internation, FTSE, S&P and STOXX have adopted it.

The MSCI India and Standard Index is also based on the free-float system.

Foreign institutional investors will find it easier taking a call on Indian companies as the practice will conform to global practices. Fund managers, too, will find the free-float methodology better, sources said.

BSE pioneered the concept of free-float with the launch of the country's first free-float based technology index, BSE TECK, in July 2001 and a bank stock index, BANKEX, in June 2003.