A Futures Contract is a standardized contract to buy or sell a specific security at a future date at an agreed price. Thus, a SENSEX® future is a future on the index i.e. the underlying is the index itself. There is no underlying stock which is to be delivered to fulfill the obligations as SENSEX® futures is cash settled. As with other derivatives, the contract derives its value from the underlying index.

The main feature that differentiates the SENSEX® from other indices in the country is that it uses the "Free Float Market Capitalisation" methodology. This means that only such shares that are available for investors to trade are considered for reckoning market capitalisation,

The following shares that are not available for trading on a day-to-day basis are excluded from the calculation for market capitalisation:

• Holdings by founders/directors/ acquirers which have control element and persons/ bodies with "Controlling Interest"
• Government holding as promoter/acquirer
• Holdings through the FDI Route / strategic stakes
• Equity held by associate/group companies (cross-holdings)
• Equity held by Employee Welfare Trusts
• Locked-in shares

An index based on free float is more accurate and indicative of the actual trend and also removes the sector bias that may creep in on account of the "full market capitalization" model.