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In the stock market(https://www.edelweiss.in/market) parlance, Sensex is a pretty common term. So, what is Sensex? The term Sensex is the brainchild of by stock market expert Deepak Mohoni. A blend of two terms, sensitive and index, Sensex constitutes 30 of the largest and most actively traded stocks on the Bombay Stock Exchange (BSE).
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Introduction In the stock market parlance, Sensex is a pretty common term. So, what is Sensex? The term Sensex is the brainchild of by stock market expert Deepak Mohoni. A blend of two terms, sensitive and index, Sensex constitutes 30 of the largest and most actively traded stocks on the Bombay Stock Exchange (BSE). These stocks belong to some of the biggest companies in India, representing various sectors of the economy. BSE Sensex was first published on 1st January 1986 and is often regarded as the pulse of stock markets in India.
How is sensex calculated Now that you know what is Sensex, here’s how its value is calculated. The calculation of Sensex is done by the free-flow method. This method takes into account the proportion of shares that can be readily traded. Then market capitalization of all the 30 companies, whose stocks are traded, is calculated, post which the BSE determines a free-float factor. It helps in determining the free-float market capitalization and then ratio and proportion are used on the base index of 100 to arrive at the value of Sensex. The formula is as follows: Sensex = (Total free float market capitalization/Base market capitalization) X Base Index Value
conclusion The Sensex and the Nifty are two of the most common terms you hear in the stock market. So the next time you hear that the Sensex has gone up by 100 points or the Nifty has gone down by 200 points, you know how the value is calculated and more importantly, what the key takeaway is.
