NEWS AFFAIRS 7 : WHERE EVERY STORY HAS IT'S AFFAIR!
Last updated on August 23rd, 2024 at 12:27 am
What is SENSEX or BSE SENSEX or S&P BSE SENSEX ?
The S&P Bombay Stock Exchange Sensitive Index or simply SENSEX is nothing but representation of Indian Stock Market Index comprises of 30 well-established and financially rich companies from various industrial sectors.
The index includes companies from all the sectors such as information technology, banking, oil and gas, consumer goods, pharmaceuticals, and more, providing a comprehensive snapshot of the Indian economy.
Other than SENSEX , India also has Nifty 50, another major stock market index in India which represents the performance of 50 of the largest and most well known companies listed on the National Stock Exchange (NSE).
How To Invest In Sensex ?
Investing in Sensex, which represents the top 30 companies on the Bombay Stock Exchange (BSE), involves a few important steps.
Here’s how you can start:
Step 1: Open a Demat Account to holds your shares in electronic form. Think of it as a digital locker for your stocks.
How to open a Demat Account ? Online or Offline format 2024 Edition
Step 2: Open a Trading Account because you cannot buy or sell stocks directly on the BSE; you need a trading account to perform these transactions online.
Step 3: Have a PAN card & Bank Account to manage the money involved in buying and selling stocks.
These three steps—opening a Demat account, a trading account, and having a bank account—are the basic requirements to start investing in Sensex.
How Sensex is Calculated ?
The SENSEX is calculated using a free-float market capitalisation methodology. This means the index reflects the total market value of the 30 constituent stocks, adjusted for the number of shares available for trading in the market.
The base value of the SENSEX was set at 100 on 1 April 1979, with 1978-79 as the base year. This historical context helps in measuring the index’s performance over time.
The SENSEX has been published since 1 January 1986 and has grown to become a key indicator of the health of the Indian stock market.
The SENSEX is often regarded as the pulse of the domestic stock markets in India, reflecting investor sentiment and broader economic trends.
On 25 July 2001, the BSE launched the DOLLEX-30, a version of the SENSEX linked to the US dollar.
This allows for performance comparison with global markets and provides a perspective on the index in terms of a major foreign currency.
Importance of the Sensex
The SENSEX is use to calculate the overall performance of the Indian Stock Market , the rise and up in the index shows Indian market condition and investor sentiment.
A rise in SENSEX indicates Indian economic growth while a decline in SENSEX indicates Indian economic challenges.
Widely used as a benchmark by mutual funds, portfolio managers, and individual investors to measure the performance of their investments. It serves as a reference point for evaluating the returns on equity investments.
The Sensex is recognised by international investors and analysts to gauge investment opportunities and economic trends in India.
The SENSEX include companies like :
- Reliance Industries Ltd. (Oil & Gas)
- Tata Consultancy Services Ltd. (Information Technology)
- HDFC Bank Ltd. (Banking)
- Infosys Ltd. (Information Technology)
- Hindustan Unilever Ltd. (Consumer Goods)
- ICICI Bank Ltd. (Banking)
- State Bank of India (Banking)
- Bajaj Finance Ltd. (Financial Services)
- Larsen & Toubro Ltd. (Engineering & Construction)
- Bharti Airtel Ltd. (Telecommunications)
Some basic traits a company must show to be part of the S&P BSE SENSEX
The company must have a large market value, meaning its shares are worth a lot in the market.
The company should have high frequency of trade every day.
The index aims to include companies from different sectors like technology, finance, healthcare, and consumer goods to reflect the overall economy.
Financial status of a company should be strong
The company should have been listed on the BSE for a significant amount of time, showing it is established and reliable.
The company must follow all regulatory rules and have good corporate governance practices meaning they operate transparently and ethically.
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