The BSE SENSEX is the benchmark index of the Indian capital market with longest social memory. It is widely used to describe the mood in the Indian Stock markets. It is the oldest index in India and has acquired a unique place in the collective consciousness of investors. It provides time series data over a fairly long period of time. The BSE SENSEX has wide acceptance among individual investors, institutional investors, foreign investors and fund managers. The inclusion of Blue chip companies and balanced industry representation in the SENSEX makes it the ideal benchmark for fund managers to compare the performance of their funds. After knowing about the fact that SENSEX have an eminent value in the Indian Capital Markets, the utmost requirement is to know SENSEX in depth. Least people know, what is SENSEX? How is it calculated? How is it changes? Who does maintain this? What are its objectives?
What is SENSEX?
The SENSEX is supposed to be an indicator of the stocks in the BSE. It is supposed to show whether the stocks are generally going up, or generally going down.
The SENSEX, short form of the BSE-Sensitive Index, is a "Market Capitalization-Weighted" index of 30 stocks representing a sample of large, well-established and financially sound companies.
The index is widely used to measure the performance of the Indian stock markets. SENSEX is considered to be the pulse of the Indian stock markets as it represents the underlying universe of listed stocks at The Stock Exchange, Mumbai.
What are the objectives of SENSEX?
The SENSEX is the benchmark index of the Indian Capital Markets with wide acceptance among individual investors, institutional investors, foreign investors and fund managers. The objectives of the index are: (i) To measure market movements, (ii) Work as a Benchmark for funds performance etc.
How is it calculated?
The SENSEX is calculated taking into consideration stock prices of 30 different BSE listed companies. It is calculated using the "free-float market capitalization" method. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization.
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