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Sensex is a portmanteau of two terms- Sensitive and Index and was coined by Deepak Mohoni, a stock market expert. Sensex was meant to denote the most popular market index of 30 companies listed under Bombay Stock Exchange. <br>This presentation will give you a better idea about Sensex and its role in the stock market(https://www.edelweiss.in/market).
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Introduction Sensex is a portmanteau of two terms- Sensitive and Index and was coined by Deepak Mohoni, a stock market expert. Sensex was meant to denote the most popular market index of 30 companies listed under Bombay Stock Exchange. The component companies listed in this index today are some of the biggest companies in this country with the most actively traded stocks. Ever since opening up in the 1990s, it has witnessed rapid growth, especially post 2000. For instance, in 2002, information technology companies helped the index cross 6000 marks for the first time. From then onwards, Sensex grew by leaps and bounds and closed at 39,056.65 on 2nd April 2019, crossing 39,000 points for the first time.
How is Sensex Calculated? Now that you know what is Sensex, here’s how its value is calculated. The calculation of Sensex is done by the free-flow method. This method takes into account the proportion of shares that can be readily traded. Then market capitalization of all the 30 companies, whose stocks are traded, is calculated, post which the BSE determines a free-float factor. It helps in determining the free-float market capitalization and then ratio and proportion are used on the base index of 100 to arrive at the value of Sensex. The formula is as follows: Sensex = (Total free float market capitalization/Base market capitalization) X Base Index Value
Conclusion You can invest in Sensex today through Index funds to make the most of the market movements. You can invest in some of the biggest companies of India through investing in Sensex.
