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Sensex

About Sensex

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What is Sensex

Sensex is the benchmark index of the BSE in India. It was launched on January 1, 1986 as a basket of 30 stocks representing the country's largest, financially-sound companies listed on the BSE.
 
The term ‘Sensex’ is a blend of words ‘Sensitive’ and ‘Index’ and was coined by stock market expert Deepak Mohini. The Sensex reflects the movements in the Indian stock market. It is considered the benchmark index of the Indian stock market. It is the oldest index in India and provides time series data from 1979, BSE, which was previously known as Bombay Stock Exchange, says on its website.
 
The bellwether index reflects the sentiment of the market and serves as a benchmark for fund managers to compare the performance of their funds. For investors, Sensex acts as a proxy for the Indian stock markets.
In simpler terms, If the Sensex value increases it means that there is a general increase in the prices of shares. On the other hand, if the value of Sensex declines, it means that there is a general decrease in share prices.
 
Since sensex comprises companies from all key sectors of the economy, it truly reflects the sentiment of the stock market in India.
 
How is the Sensex calculated?
 
Sensex, which is also referred to as BSE 30, was calculated based on the market capitalisation or “Full Market Capitalisation” when it was launched but shifted to a "Free-float Market Capitalisation" methodology from September 1, 2003. This method is used by all major index providers including MSCI and FTSE.
 
Free-float is that proportion of total shares issued by the company that is readily available for trading to the general public. It does not take into account promoters’ holding, government holding, and other shares that will not be available in the market for trading in the ordinary course of events.
 
Free-Float Market Capitalisation = Market Capitalisation x Free Float Factor
 
To give an example, let’s assume that Firm A has 100 shares. Out of these 100, 70 are available to the general public and 30 are owned by the government. This means that 70 are ‘free-floating' shares and thus the free float factor will be 70%.
 
‘Market capitalisation’ is the valuation of the company. It can be determined by multiplying the price of a share with the number of shares issued.
 
To calculate Sensex:
 
- The market capitalisations of all 30 companies in the index are determined.
 
- The Free Float market capitalisation of all 30 companies is calculated.
 
- Free Float market capitalisations of all the firms are added to get a total.
 
- Formula of Sensex is applied; Sensex = (total free float market capitalisation/ base market capitalisation) * Base index value.
 
- The base year to calculate Sensex is 1978-79 and the base value is static but it has to be changed. According to BSE, Rs. 2501.24 crore is to be used as the base market capitalisation.
 
- The base index value is 100.
 
So, Sensex = free float market capitalisation of 30 firms /25041.24 crores*100
 
So, How are these 30 companies selected?
 
The BSE's criteria for selecting these companies is as followed:
 
BSE-listed stock: The stock should have a listing history of at least one year on BSE to be considered.
 
Market Capitalisation: The company should be in the Top 100 companies listed by full market capitalisation.
 
Trading frequency: The Security should have been traded on each and every trading day for the last one year, BSE says. Exceptions to this can be made in case of extreme reasons.
 
Average Daily Trades and Average Daily Turnover: The Security should be in the Top 150 firms listed by average number of trades per day and by average value of shares traded per day for the last one year.
 
Track Record: In the opinion of the Index Committee, the firm should have an acceptable track record, BSE says on its website.
 
The Index Committee meets every quarter to review all the BSE indices including SENSEX. However, every review meeting may or may not lead to a change in the constituents.
 
How is Sensex different from Nifty?
 
Nifty is the benchmark index of the National Stock Exchange. ‘National Fifty’ make up Nifty.
 
The major difference between Sensex and Nifty is the number of constituents they have.
 
While Nifty 50 constitutes of the top 50 companies that are actively traded in NSE, Sensex comprises the top 30 companies actively traded in BSE.
 
Sensex is more niche and on the other hand, Nifty is broader as it has 50 firms.
 

Latest Updates on Sensex

Both indices below 200-DMA; equity investor losses mount to Rs 18.4 trn in 5 days

Updated On: 20 Dec 2024 | 11:57 PM IST

Overseas investors pull out Rs 8,000 crore this week amid rupee slide

Updated On: 18 Dec 2024 | 11:16 PM IST

Investors await Fed move; concerns grow over widening trade deficit

Updated On: 17 Dec 2024 | 11:40 PM IST

The initial share sale received bids for 42,406,035 shares against 58,560,902 shares on offer, as per NSE data

Updated On: 16 Dec 2024 | 6:47 PM IST

Under the proposal, stock brokers can offer such a facility to retail investors only after getting each program approved by the stock exchanges

Updated On: 16 Dec 2024 | 6:07 PM IST

Mkts end in green for 4th straight week, longest winning run since July

Updated On: 13 Dec 2024 | 11:18 PM IST

Growth, strategy may help close the gap with Zomato

Updated On: 10 Dec 2024 | 10:09 PM IST

Muscles ahead in passive fund arena with AUM more than doubling in past year

Updated On: 04 Dec 2024 | 11:51 PM IST

FPIs on Tuesday were net buyers worth Rs 3,665 crore, while domestic institutions sold shares worth Rs 251 crore

Updated On: 03 Dec 2024 | 11:19 PM IST

After declining 494 points, or 0.6 per cent, in opening trade, the Sensex ended the session at 80,248, gaining 445 points, or 0.6 per cent

Updated On: 02 Dec 2024 | 10:29 PM IST

Bank credit is not growing because companies are still focused on deleveraging their balance sheets, while higher interest cost is squeezing the net interest margins of banks

Updated On: 01 Dec 2024 | 11:00 PM IST

The Sensex, the Nifty Midcap 100 and the Nifty Smallcap 100 indices managed to eke out marginal gains for the month

Updated On: 29 Nov 2024 | 11:36 PM IST

The weekly contracts of Sensex will expiry on Tuesday of every week instead of Fridays, the BSE said

Updated On: 28 Nov 2024 | 10:25 PM IST

Zomato's Sensex entry follows the stock's inclusion in the futures and options (F&O) segment. Zomato is also expected to be added to several other indices

Updated On: 25 Nov 2024 | 10:34 PM IST

Nifty, Sensex end losing streak but give up most of their intraday gains

Updated On: 19 Nov 2024 | 11:50 PM IST

LIC, Zomato, Dmart among largest firms in the list of 45 stocks

Updated On: 14 Nov 2024 | 10:35 PM IST

Forex traders said the USDINR pair has shown significant volatility in recent sessions, with the rupee inching closer to its all-time low of 84.40

Updated On: 13 Nov 2024 | 11:07 AM IST

IT firms, which generate significant revenues from the US, gain the most on optimism that potential corporate tax cuts by the new President will boost revenues

Updated On: 06 Nov 2024 | 11:01 PM IST

The benchmark index was down 1.18 per cent on Monday and closed at 78,782 compared to Friday's close of 79,724

Updated On: 05 Nov 2024 | 12:27 AM IST

Stock Market Highlights: 26 out of 50 constituent stocks of Nifty50 ended in the green, led by Ultratech Cement, Shriram Finance, Grasim, Titan, and Mahindra & Mahindra

Updated On: 24 Oct 2024 | 4:01 PM IST