If you’ve ever heard people talking about the stock market or financial news, you’ve probably come across the term “Sensex.” But what exactly is Sensex, but what does it actually mean? In this blog post, we’ll give you a simple explanation of the what is sensex and its significance.
List of contents
- What is sensex
- Importance of sensex
- How is sensex calculated?
- How to invest in sensex?
- Milestones of sensex
- List of 30 stocks comprising the BSE sensex
- Conclusion
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What is Sensex?
The Sensex, abbreviated from ‘Sensitive Index,’ is a stock market index that represents the Bombay Stock Exchange (BSE). It measures the performance of the 30 largest and most actively traded stocks on the Bombay Stock Exchange (BSE).
It is India’s first listed exchange, established in 1875. The Sensex started with a value of 100 on April 1, 1979, and its base year is referred to as 1978-79. The term ‘Sensex’ was coined by Deepak Mohoni in 1989.
Importance of sensex
The Sensex keeps an eye on the top 30 big companies on the Bombay Stock Exchange (BSE). It shows how well these companies are doing together, which helps people who invest money know if the Indian stock market is doing well or not.
There are actually around 6000 companies on the BSE, so it’s tough to look at all of them. That’s why the Sensex is useful. Twice a year, in June and December, the Sensex gets checked to make sure it still has the best 30 companies.
Knowing the Sensex helps us understand if the stock market is going up or down. If the Sensex is going up, it’s a sign that the economy is growing, and investors like to buy stocks. But if the Sensex is falling, investors may become cautious. It’s kind of like a thermometer for the Indian stock market.
How is sensex calculated?
It is calculated using a free-float market capitalization weighted method.
the value of BSE Sensex is calculated using this formula:
Sensex = (Free float market capitalization of 30 companies / Base market capitalization) * Base value of the Index.
The base year is 1978-79 and the base value is 100 index points
Free float market capitalization = Market capitalization*free float factor
market capitalization is calculated as
Market capitalization = share price per share * no. of share issued by the company
How to invest in sensex?
To invest in Sensex, you’ll need a Demat account and trading account. These accounts will allow you to buy and sell shares electronically. You can open these accounts through banks, financial institutions, or brokerage firms.
There are two main ways to invest in the Sensex:
1. Direct investment in Sensex stocks
2. Investment in Sensex index funds
Milestones of sensex
The Sensex was launched on January 2, 1986, with a base value of 100. Since then, it has crossed many important milestones, including:
- July 25, 1990: It crosses 1,000 points for the first time.
- January 15, 1992: It crosses 2,000 points for the first time.
- October 11, 1999: It crosses 5,000 points for the first time.
- February 7, 2006: It crosses 10,000 points for the first time.
- December 11, 2007: It crosses 20,000 points for the first time.
- March 4, 2015: It crosses 30,000 points for the first time.
- May 23, 2020: It crosses 40,000 points for the first time.
- January 21, 2021: It crosses 50,000 points for the first time. September 24, 2021: It crosses 60,000 points for the first time.
These milestones are significant because they reflect the growth of the Indian economy.
List of 30 stocks comprising the BSE sensex
| Company Name | Sector |
|---|---|
| Asian Paints Ltd | Paints |
| Axis Bank Ltd | Bank |
| Bajaj Finance Ltd | NBFC |
| Bajaj Finserv Ltd | Finance |
| Bharti Airtel Ltd | Telecommunication |
| HCL Technologies Ltd | Information Technology |
| HDFC Bank Ltd | Bank |
| Hindustan Unilever Ltd | FMCG |
| ICICI Bank Ltd | Bank |
| IndusInd Bank Ltd | Bank |
| Infosys Ltd | Information Technology |
| ITC Ltd | FMCG |
| JSW Steel Ltd | Iron & Steel |
| Kotak Mahindra Bank Ltd | Bank |
| Larsen & Toubro Ltd | Construction |
| Mahindra & Mahindra Ltd | Automobile |
| Maruti Suzuki India Ltd | Automobile |
| Nestle India Ltd | FMCG |
| NTPC Ltd | Power |
| Power Grid Corp of India Ltd | Power |
| Reliance Industries Ltd | |
| State Bank of India | Bank |
| Sun Pharmaceutical Industries Ltd | Pharma |
| Tata Consultancy Services Ltd | Information Technology |
| Tata Motors Ltd | Automobile |
| Tata Steel Ltd | Iron & Steel |
| Tech Mahindra Ltd | Information Technology |
| Titan Co Ltd | Diamond & Jewellery |
| UltraTech Cement Ltd | Cement |
| Wipro Ltd | Information Technology |
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Conclusion
In this blog, we’ve discussed “what is sensex ”. Sensex is like a scorecard for the Indian stock market. It tells us how well the big companies are doing and gives us insights into the overall financial health of the country. Understanding the Sensex is like having a special tool that helps us know how the stock market is doing. It gives us an idea of what’s happening in the market and helps people decide where to invest their money.
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