What is Sensex?

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What is Sensex?

Friends, Sensex is the benchmark index of Bombay Stock Exchange or BSE, which was started on 1 January 1986 and represents the 30 largest companies of India.

Sensex means ‘sensitive’ and ‘index’ which was named by Deepak Mohani. Sensex shows any kind of movement in the Indian share market.

This is the oldest index of India which keeps the data till 1979 safe with it.

The increase in numbers in the Sensex index indicates that the value of the shares listed in it is also increasing and when its numbers are low, the value of the shares of the companies is coming down.

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When and how can one trade in Sensex?

The trading timings in Sensex are from 9:15 am to 3:30 pm, from Monday to Friday

How is Sensex calculated?

The Sensex is calculated using the methods mentioned below, let us know:-

First of all, the market value of all the 30 companies is determined by Sensex.
The free-float market capitalization of all the 30 companies listed is calculated.
The total amount is obtained by adding the free-float market capitalization of all the shares.
Then the formula of Sensex is applied – Sensex = (Total Free Float Market Capitalization / Base Market Capitalization) * Base Index Value.
The year for counting Sensex is 1978-1979. According to Bombay Stock Exchange, Rs 2501.25 crore is to be used in base market capitalization.
The base value of the index is 100.
In this way, Sensex = Free Float Market Capitalization of 30 firms / 25041.24 crore * 100.

How have the 30 companies listed in Sensex been selected?

Let us understand the criteria of the top 30 companies below:-

BSE-listed stock:

For being listed in the Bombay stock exchange index, first of all, it is important that the company has a listing history of at least one year with the base.

Market capitalization:

It is absolutely necessary for the capitalization of the company to be in the top 100 companies.

Trading frequency:

It is absolutely necessary for the stock to be traded on a daily basis.

Average daily trades and average daily turnover:

The trading volume and trading value of the company in the last one year must be in the top 150 companies.

Track record:

The track record of the trading company should be better than the base and should be acceptable.