WHAT IS SENSEX
SENSEX is a type of index, and it is commonly known by the name of Stock Exchange Sensitive Index. SENSEX is India’s oldest stock market index for your information, it was started in the year 1986 if we talk about it, the SENSEX tells the boom and slowdown in the prices of Bombay Stock Exchange shares.There are about 30 companies inside the SENSEX. The main function of the SENSEX is to monitor the fluctuations in the shares of the company coming inside it. This is today 37% of the total of Indian GDP.
ABOUT OF SENSEX
As we know well that Sensex is a part of Bombay Stock Exchange and the Sensex is made up of shares of only thirty companies listed on the Bombay Stock Exchange whereas the total number of companies listed on the Bombay Stock Exchange. The figure is more than 6000.
When the SENSEX is calculated only 30 companies which are prominent in the market are included in their shares. The reason behind the inclusion of stock prices of these 30 companies is that shares of these 30 companies are bought and sold the most.
Secondly, it is the 30 largest companies their market cap is about half of all the shares listed on the stock exchange which is a huge achievement. The third reason is that these 30 companies are selected from 13 different sectors, these 30 companies are considered the biggest in their sector.
SENSEX India is an index of the stock market S&P BSE located in Mumbai, a very beautiful city in the country. The full form of BSE is Bombay Stock Exchange. Whereas SensEx is made up of Sensitive IndEx. For your information we would like to tell you that Sensitive Index means Sensory Index. As we all know in today’s time, only the 30 largest companies are registered in the Mumbai stock market and according to the market cap.
If we say in more simple terms it shows that with the decrease in the Sensex, the big companies of the country are getting profit or loss. The SENSEX started from January 1, 1986 which includes 30 companies and these companies change over time, a committee has been formed to select these thirty companies to index 30 companies. The reason is also known as Bombay Stock Exchange 30.
How does Sensex calculate
So as you may be aware that the base year for Calculation has been selected from 1978-1979. Friends at that time the base price of SENSEX was kept only and only 100 rupees. The Bombay Stock Exchange was first calculated in the year 1986, and since 1 September 2003 Calculation of SENSEX has been done with Free Float Method.In the Free Float Method (FFM), the shares of the company which are present are always available for public trading and out of which the share of the Goverment is removed and the balance that is left will be available to the public trading in the market. Is available for Understand this through the example given below.
History of sensex
It is also important to understand the BSE Sensex history. When the stock market and related indices were used in the market there were only a handful of people who relied on the concept of investing in someone else’s business through “shares”.
But, over time, the perception of people investing has seen a lot of change. At the present time most people consider investing in the stock market as an important investment method to increase their income.
From the market capitalization-weighted method to the use of the ‘free-float market capitalization-weighted’ method, markets and indices have experienced a lot of maturity.
No one would have imagined when the index was launched in the year 1986, which has seen unprecedented growth in the last 3 decades.
Since then, the Sensex has seen many historical gains and declines.
During July 1990, the Sensex touched the four-digit figure for the first time and closed at 1,001.
.The Sensex becomes the S&P Sensex on February 19, 2013, when the BSE tie-up with Standard and Poors and emerges as a brand for the SENSEX and other indices.
.The Sensex closes at a price higher than the Hang Seng Index (this is Hong Kong’s stock market index) after March 13, 2014, thus becoming Asia’s premier stock market index.
.A few months later in May 2014 the SENSEX creates a new record value of 25,000 and closed above its milestone value on 5 June 2014.
.A new record was made again in the year 2018 when the Sensex recorded a mark of 38,000 during intraday trade and closed at 38,024.37.
Interesting Facts about Sensex
.On July 25, 1990, the Sensex closed at 1001 points for the first time.
.In 1991, the then Finance Minister of India “Dr. Manmohan Singh” announced the measures for economic liberalization, economic dynamism had started coming. In 1992-93, the budget for the Indian market increased the hopes of import-export due to which the Sensex rose by 4000 points by March 1992.
.Along with the unprecedented progress of information technology in the year 2000, the SENSEX has crossed the 6000 mark. Foreign investors also became active around the year 2006, as a result of which the Sensex crossed the 8000 mark on 8 September 2005.
.7 February 2006 was the golden day of the Bombay Sensex and crossed the 10,000 mark.
.On October 29, 2007 it crossed the 20,000 mark.
.It reached a height of 21,078 on 8 January 2008.
Why only 30 companies are placed in Sensex
There are more than 5000 companies under the basic BSE and it is very difficult to keep track of these 5000 companies so the 30 companies selected for SENSEX are one of the biggest companies in their sector and these companies Also called Blue Chip Companies.
These 30 companies are selected on the basis of market capitalization, which varies. What is Market Capitalization? We will go further.
Nearly half of the market is made up of the shares of these 30 companies, so the condition of their stocks reflects the market. Obviously if these blue chip companies perform well, it means that the condition of the market will also be good and if their performance is not good then the market will also be slow.
Top 30 Companies Listed in SENSEX
|Axis Bank||Banking – Private|
|Bajaj Finance||Finance (NBFC)|
|Bajaj Finserv||Finance (Investment)|
|HCL Technologies||IT Services & Consulting|
|HDFC Bank||Banking – Private|
|Hindustan Unilever Limited||FMCG|
|ICICI Bank||Banking – Private|
|IndusInd Bank||Banking – Private|
|Infosys||IT Services & Consulting|
|ITC Limited||Cigarettes & FMCG|
|Kotak Mahindra Bank||Banking – Private|
|Larsen & Toubro||Engineering & Construction|
|Mahindra & Mahindra||Automobile|
|Oil and Natural Gas Corporation||Oil exploration and Production|
|Power Grid Corporation of India||Power generation/Distribution|
|Reliance Industries Limited||Conglomerate|
|State Bank of India||Banking – Public|
|Tata Steel||Iron & Steel|
|Tata Consultancy Services||IT Services & Consulting|
|Tech Mahindra||IT Services & Consulting|
|Titan Company||Diamond & Jewellery|
The process of choosing companies in Sensex
An index committee has been formed to choose which company will come under the SENSEX. The committee, government managers, economists, mutual fund managers, etc. are included.
.Shares of the company must be bought and sold daily.
.The company should be one of the largest 150 companies in India in terms of buying and selling shares daily.
.Free-float market capitalization of companies should also be very good to join SENSEX.
How SENSEX decreases or increases
SENSEX gives us information about the stock market. It keeps an eye on the shares of 30 companies under it.
If the stock price of those 30 companies listed in the stock market increases then the SENSEX index also increases and on the contrary if the stock price of those 30 companies decreases then the SENSEX index also comes down.
In the long term, the reason for the increase in prices reflects the good growth of the company and sometimes due to the news the price of shares increases or decreases. If there is any negative news about a company, then the trust of the people starts to rise from that company and they start selling shares, which bring down the prices of the shares.
And the sensex starts coming down.
Difference between SENSEX and NIFTY
NSE and BSE are the two largest stock exchanges in India. The stock exchange is the place where all the companies are listed which introduce Buyer and Seller so that they can buy and sell shares among themselves.
Both NSE and BSE have their own indices. Nifty is the major index of the NSE and the SENSEX is the major index of the BSE. The work that Sensex does for BSE does the same for nifty NSE and the process of selecting Stocks for both is almost the same. The SENSEX indicates the price movement of all the companies listed on the BSE and the same nifty refers to the price movement of all the companies listed on the NSE.
Benefits of sensex
If Sensex increases then the company benefits and when the company benefits then the number of people buying shares also increases which also increases the value of the company’s shares which leads to the growth of the company.
Sensex also goes up when the share market is good so investors (investors) also buy shares from abroad which have a good effect on our Indian currency and Indian currency can be stronger than foreign currency.
Share holders also benefit from the increase of Sensex and the economy of the country also improves, which benefits the common people.
Major stock Exchange of Indian Market
National Stock Exchanges – National Stock Exchange was established on 1992. It was recommended by the M J Pherwani Committee in 1991. Its headquarters is in South Mumbai Worli.
Bombay Stock Exchange (BSE) – This is the oldest stock exchange in Asia. It was established in 1875 AD under the name of Stock Exchange Mumbai which was changed to Bombay Stock Exchange (BSE) in 2002.