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Sensex is the benchmark index used by the Bombay Stock Exchange since its starting days. Sensex is based on scientific designed and globally accepted construction and review methodology. <br>This presentation will give you a deeper insight into the impact of sensex on Indian economy.<br>YOu can learn more about stock market indices(https://www.edelweiss.in/investology/introduction-to-stock-markets-51c006/what-is-nifty-sensex-stock-market-indices-692d05) online.
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Introduction Sensex, also known as, the S&P BSE Sensex Index is the benchmark index of the Bombay Stock Exchange (BSE). Sensex comprises the 30 largest and most actively traded stocks on the BSE. It provides an accurate interpretation of the Indian economy. Sensex is the oldest stock index in India, compiled in 1986. Analysts and investors use Sensex to measure the growth of a particular business sector and overall growth. Sensex was at its peak in August 2018 with 38896.63 points. You can read more about market indices online.
How is sensex calculated Sensex is the benchmark index used by the Bombay Stock Exchange since its starting days. Sensex is based on scientific designed and globally accepted construction and review methodology. To calculate an index value, we need a base year, and Sensex is no different. We consider 1978-1979 as our base year to calculate the benchmark index. The base value for the base year is 100. The index was initially calculated using the Full s Capitalization methodology. In September 2003, we shifted to the Free Float Market Capitalization methodology of index construction. In this method, we consider the free-float market of the stocks to calculate the index number, unlike the full market capitalization. Free-float market capitalization calculates the index based on the stocks that are not sold in the market.
Effect of sensex fluctuation on indian economy So, all in all, if Sensex keeps fluctuating, then it means that the performance of the market today and stocks is not consistent, which means it is not stable. This instability in Sensex might lead to doubts in the minds of investors. If Sensex increases day in and day out, then the Indian economy is in the safe hands and is bound to move forward. It also means that, if there is a healthy economy, investments will be in bulk and slowly it will lead to a reduction of finance issues. If Sensex decreases, then it is a negative sign for the economy. It implies that the economy is slim, and it is less likely to pick up the expected growth.
Conclusion Many Indian and foreign investors invest money in primary and secondary markets of India. With time, if the Sensex increases, it means all the investors are sure to become wealthy with the expected gains. If this number keeps growing, there is a good chance that it will attract foreign investors to invest in Indian markets. Similarly, if it goes down, we might see an outflow of FII. You can learn about stock market indices online.