The Ultimate Guide to Understanding BSE Sensex: Boost Your Financial Knowledge in No Time!

WHAT IS BSE SENSEX

The BSE SENSEX is a stock market index of 30 financially sound companies listed on the Bombay Stock Exchange in India. These companies represent diverse sectors of the Indian economy and are some of the most extensive and actively traded stocks. The index has been published since 1986 and is considered an essential indicator of the Indian stock markets. The base value of the index was taken as 100 on 1 April 1979, and a dollar-linked version of the index called DOLLEX-30 was launched on 25 July 2001.

DERIVATION OF BSE SENSEX

Imagine you're standing on a platform in the middle of a bustling railway station, trying to navigate your way through the throngs of people. Suddenly, you hear a piercing whistle, and the train pulls into the station with a loud screech of its brakes. The SENSEX is a bit like that train, hurtling through the stock market with incredible momentum and force.

But what exactly does SENSEX mean? Well, let's break it down. The first part, "Sensitive," suggests that the index is responsive and in tune with the ever-changing conditions of the market. It's like a finely-tuned instrument, picking up on even the slightest fluctuations and reacting accordingly.

The second part, "Index," is all about measurement and comparison. Just as you might use a ruler or a scale to measure physical objects, the SENSEX measures the performance of the top 30 companies on the Bombay Stock Exchange, comparing their values and tracking their progress over time.

Taken together, SENSEX is a portmanteau of these two words, a symbol of the dynamic and ever-evolving nature of the stock market. It's a testament to the power of innovation and human ingenuity, as we strive to create

HOW IS IT ESTIMATED

The BSE SENSEX is a market-weighted stock market index of 30 financially sound companies listed on the Bombay Stock Exchange, representing various sectors of the Indian economy. The index composition is reviewed and modified periodically to reflect current market conditions. It uses the free float capitalisation method to calculate the level of the index based on the free float market value of the 30 constituent stocks relative to a base period. The market capitalisation of a company is determined by multiplying the price of its stock by the number of shares issued by corporate actions. The long-run rate of return on the S&P BSE SENSEX is 18.6% per annum, using information from April 1979 onwards.