What is sensex and how it is calculated?
What is SENSEX?
The SENSEX (SENSitive indEX) is an indicator which indicates the performance of the 30 major companies listed on BSE (Bombay Stock Exchange) and hence it is also called BSE 30. In a simple word, we can say if sensex goes up then the prices of the top traded stocks of major companies listed on the BSE will go up and similarly, when sensex goes down then the prices of the top traded stocks of major companies listed on the BSE will go down.
In 1986, BSE (Bombay Stock Exchange) introduced a Stock Index called SENSEX by compiling the prices of the most actively traded BSE scripts which later on emerges as a barometer of the Indian Stock Market. Sensex is not only the oldest stock market index in India but also the most popular and top traded market index. The base year of SENSEX is 1978-79 with a base value of 100.
How SENSEX is calculated?
The Sensex is calculated by compiling the current prices of 30 listed companies on BSE (Bombay Stock Exchange) and this calculating method is known as “free-float market capitalisation” method. During the market opened session, the trading computer automatically calculates the SENSEX in every fifteen seconds considering the prices of the Index scripts at which trades are executed and updated regularly on all trading workstations connected to the BSE trading computers in real time.