WHAT IS SENSEX

SENSEX

The BSE Sensex (Bombay Stock Exchange Sensitive Index) is a "Market capitalization weighted index, of the shares of 30 select companies. These 30 component Stock represent a sample of large, well established and financially sound companies. The Sensex is widely reported in both domestic and international print and electronic media. It is widely used to measure the performance of India's Stock markets.

The BSE Sensex is a benchmark index of the Indian capital market. It is considered to be the pilse of the Indian stock markets. The base period of the sensex in 1978-79 and its base value is 100 points. It was first computed in 1986. The Sensex serves the following objectives.

1.To Measure Market Movements:The sensex reflects movement  (rises and dips) in the Indian Stock Markets. Itr is widely used to judge the mood in the Indian Sock Markets. 

2.Benchmark For Funds: The Sensex consists of blue chip companies and gives a balanced industry representation. Therefore, Fund managers use it as the benchmark to judge the performance of their mutual funds.

In fact small investors, institutional investors and money managers all refer to the Sensex for their specific purposes. The criteria used for selection of scrips for the Sensex are as follows:

1.Market Capitalisation: The scrip should be among the top 100 listed companies in terms of market of market capitalsation Moreover, the market capitalisation of the scrip should be more than 0.5 percent of the total market capitalisation of the Index. Companies in the Sensex account for around one fifth of the market capitalisation of the BSE.

2.Industry Represebtatiopn:The scrip should be representative of its industry group. The companies in  the index are leaders in their respective industries.

3.Regularity of Trading:The scrips should have been traded on every trading day for the last six months, excepts for extreme reasons like scrip suspension, etc.

4.Number of Trader:The scrip should be among the top 150 listed companies by average number of trader of trades per day for the last six months. 

5.Volume of Trade:The scrip should be among the top 150 listed companieslisted by average volume trader per day for the last six months.

The Sensex is reconstituted periodically in order to represent the true face of Indian economy.The companies in the sensex and their weighted are revised periodically. Therefore the readers are advised to get the lastest position from the website of the Bombay Stock Exchange.