Everything to know about Sensex

Everything to know about Sensex

S&P BSE Sensex Index popularly known as Sensex is the oldest stock index in the country. This index is known for being the benchmark index of the Bombay Stock Exchange. Sensex is known as the core index of Indian stock exchange as all the analyst as well as an investor all over the country studies this index to know about the growth and development of various industries. Sensex was first published in the year 1989 and the famous term Sensex was given by Deepak Mohini by combining two terms i.e. sensitive and index. This index has experienced tremendous growth since its first publication.

Year by year this index has managed to achieve various milestones such as in February of the year 2006, this index touched 10,000 points which is indeed a big thing for the Indian economy. The growth in Sensex has been highly credited to the rise in the middle class as this class is the major driver of the consumption demand. However, due to the Covid-19 pandemic, the index suffered a fall in its points in the year 2020 but finally, in the year 2021, the index started to make recovery thereby touched the record high in points.  

This index is used for knowing whether the economy of the country is booming or busting. It is nothing but reflective of India’s GDP as this index consist of India’s 30 large as well as liquid industries stocks. The stocks belong to companies from various sectors. The value of Sensex is calculated by BSE that uses the Free Float market capitalization method after selecting the 30 stocks that will be included in the index. The stocks for being included in Sensex must fulfill a certain criterion. These include:

  • The stocks of the company must be listed in BSE.
  • The stocks must belong to large and mid-cap companies.
  • The stocks should be highly liquid.
  • The companies must have a strong revenue-growth model.

If all these criteria are fulfilled by the company then their stocks could form the part of the Sensex. Various objectives are fulfilled by Sensex. These are mentioned below:

  • Sensex is used by investors and various fund managers as a benchmark to see whether their funds are growing or not in the BSE. This is because Sensex provides the investor with detailed as well as balanced information about all the sectors.
  • Sensex fulfills the objective of measuring the movement in the Indian stock market. This is because BSE for many decades has been nothing but a good indicator of the sentiments of traders, speculators, and investors. Thus providing the best means to various users to know about the Indian market movement.
  • Sensex is known to comprise stocks of 30 leading companies from various sectors thus it is used by various institutional investors, fund managers, and even small investors for their respective purposes. Thus Sensex is highly referred to for different trading and investing purposes.

Hence these are the major objectives that are fulfilled by Sensex. To trade in the Sensex, all one needs to open a Demat account and trading which can easily be done by availing the services of 5paisa.