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What is Sensex ?

How sensex is being calculated?

The S&P Bse Sensex also known as Sensex or Bse30 Index. It is a free float -market weighted index of 30 well-known, well-established and financially sound companies of India. These 30 companies must be listed on Bombay stock exchange. These 30 companies are large and actively traded on Bse. It also represents various industries from Indian economy, published since 1 january 1986.

The sensex was introduced on 1st april 1979 with a base value of 100. Bse launched its Dollex30, a dollar linked senex on 25 july 2001.

 

https://www.chaloniveshak.com/wp-content/uploads/2018/10/companies-included-in-sensex.jpg

 

S&P Bse Sensex 30

The sensex word coined by Mr. Deepak Mohoni , well- known stock market analyst. It is a combination of two words sensitive and index. (Sensex) . The initial S&P is derived from standard and poor’s financial services LLC. S&P is one of the best rating and Stock Market Analysis Company.

Calculation of Sensex

 

  • Our sensex is scientifically designed and also represents globally accepted review methodology. Our sensex is widely noticed by various national and international print and electronic media.
  • Initially our sensex was calculated on full market capitalization method. With effect from 1 September 2003 it has been shifted to free flow market capitalization method.
  • The free float method considers only such stocks which can be readily available for trade in the market. It does not include stocks from promoters quota, locked in and pledged.

 

 

First, the market capitalization is taken into account. This is done by multiplying all the shares issued by the company with the price of its stock. Then BSE determines a Free-float factor that is a multiple of the market capitalization of the company. This helps in determining the free-float market capitalization based on the details submitted by the company. Then, Ratio and Proportion are used based on the base index of 100. This helps to determine the Sensex.

 

How companies are included in Sensex?

 

There are 30 companies included in Sensex. When we say that Sensex is 36000, it means free-float market value of these 30 companies is Rs 36,000 crore.

What is the difference between market capitalization and free-float market capitalization?

  • Market cap = Market Price x no. of shares issued by company.
  • Free-float market cap = Market cap x free float factor.
  • No partiality is being done in selecting company for sensex
  • There are approximately 5000 plus companies listed in india and they are categorized in 4 groups. ( A, B, T And Z )
  • Z group companies can not be part of sensex 30
  • New listed or IPO companies can not be part of sensex 30 .
  • Sensex companies must report sales turn over of last 4 quarters
  • Later all 5000 plus companies ranked as per their market cap and top 75 companies selected by using various other screening methods.

As per their free float capital companies are selected in sensex. And special weight age  is given to these companies in the sensex. Below is the table for current weight age in the sensex.

 

https://www.chaloniveshak.com/wp-content/uploads/2018/10/weightage-of-various-companies-in-the-sensex.jpg

Also read : How sensex has behaved during pre and post election seasons

Major 40 intraday corrections Witnessed in Bse Sensex

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Sensex’s biggest gains

March 24, 1992: The Sensex rises by 426 points (a gain of 13.14 per cent), the highest one-day gain in the history of the Sensex to close at 3,670 following a market-friendly Budget.

May 18, 2004: Sensex gained 371 points, the second highest gain in its history, to close at 4877 following heavy buying.

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