"SENSEX"

What is sensex?

     Full Form of Sensex is Sensitive Index.  People are happy when the sensex goes up and upset when it goes down.  Sensex is the stock market index of the Bombay stock Exchange or BSE – it is also called BSE sensex.

Sensex meaning:

     It is the market weighed stock index of 30 companies that are selected on the basis of financial soundness and performance.  Usually, large and well-established companies that are representatives of the various industrial sectors are chosen.

     Sensex was first published in 1986.  The base value of Sensex is 100 and the base year is 1978-79.

     Let us look at some numbers.

           The number of stocks in the sensex-30

            As of March 15, 2017, the Full market Capitalization of sensex is 4,989,299                                   crores and the free float market capitalization is Rs.2,687,777 crores

How Sensex is calculated?

     The Sensex is calculated using the Free-float Market Capitalization’ method.  In this method, the index reflects the free-float market value of the 30 constituent stocks relative to a base period.

What is meant by free float market capitalization?

     Free float stands for the shares that are open for trading.  All shares may not be free floating.  Some may be pledged, some may be in the hands of the persons or bodies having controlling interest/promoters, some shares may be government holdings etc.  Such locked-in shares are not considered free floating.

What is Market capitalization?

• Market capitalization is the combined worth of all the stocks of different companies within stock exchange.

• The market capitalization of a company is arrived at by the product of the price of its stock and number of shares issued by the company.

• This figure is multiplied by the free-float factor to determine the free-float market capitalization.  The free float factor is derived from the information each company submits regarding the free floating shares.  Every company has to give the information on a quarterly basis in a format given by BSE.

•   The free float market capitalization of all companies is summed up.

•    The free float market capitalization is then divided by an index divisor to get the Sensex value.  This divisor adjusts for changes in stock and other corporate actions.  The divisor is the value of the sensex Index in the base year.