What is Sensex: If you are even slightly interested in the stock market, you must know that the top 30 companies listed in the Bombay Stock Exchange (BSE) are financially strong. Sensex tracks all those companies. All these companies are selected according to different categories. So that an overview of the entire state of India’s economy can be done, the Sensex is called the price indicator of the Indian stock market. Through Sensex, we get to know investors’ sentiments and market trends.
Meaning of Sensex
- If we tell you about Sensex in detail, then the word Sensex is formed from two words: the first one is Sensitive, and the second one is Index. With the help of Sensex, we can quickly identify the trends in the market.
- Sensex was first launched in 1986, and let us tell you that Sensex is the most followed stock index in India.
Important milestones of Sensex
- 1986: Sensex was officially launched.
- 1990: Sensex crossed 1,000 points for the first time. This was a critical moment for the Indian stock market, which shows that the Indian economy is gradually moving forward.
- 1999: This was the period when there was a dot-com boom, significant investments were being made in IT and technology companies and at the same time the Sensex crossed 5,000 points.
- 2021: Let us tell you that during the Corona epidemic going on all over the world, the Indian stock market recovered rapidly, and during this time, the Sensex crossed 50,000 points. This shows the resilience of the Indian economy and the confidence of investors.
Method of calculating Sensex
Talking about Sensex calculation is done by the free-float market capitalization method. This method was started in 2003. Under this method, those shares are publicly available to investors in the stock market. The shares owned by promoters and the government are not included in the calculation.
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For the Sensex calculation method, you can follow the steps given below:
- Free-float market capitalization: Free-float market capitalization means the total number of shares of any company publicly available for trading. We can determine the company’s market capitalisation by multiplying the value of all these shares.
- Value of Sensex: To calculate the value of Sensex, we add the free-float market capitalization of all the 30 companies listed in the Sensex. Then, this is divided by an index divisor. The level of Sensex is known by adjusting the index divisor.
Importance of Sensex
- Barometer of the stock market: Sensex is the indicator of the Indian stock market. With the help of Sensex, we can find out the market trend trend.
- Investor’s guide: The companies included in the Sensex lead their sectors. Therefore, Sensex is considered a tool for knowing the market situation for all investors investing in the stock market.
- Reflection of the economy: Let us tell you that Sensex not only reflects the situation of the stock market. Apart from this, it also reflects the economic condition of the country. When the Sensex rises, it usually indicates economic growth; whenever it falls, it means economic recession.
FAQs-Sensex
Top 30 companies listed on the Bombay Stock Exchange (BSE) which are financially strong. Sensex tracks all those companies. All these companies are selected according to different categories.
Free-float market capitalization means the total number of shares of any company that are publicly available for trading. We can determine the company’s market capitalisation by multiplying the value of all these shares.
To calculate the Sensex, we add the free-float market capitalization of all the 30 companies listed on the Sensex and then divide it by an index divisor. The Sensex level is determined by adjusting the index divisor.
My name is Vijay Kant Sharma, and I have been providing stock market news to all my readers for the last three years. I have shared stock market articles on many websites in my career. This time, I will provide you with all the information about the Indian stock market on Groww Stock.
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