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The term Sensex refers to the benchmark stock index of the Bombay Stock Exchange (BSE) in India. It consists of 30 of the largest and most actively traded companies on the BSE, serving as a key indicator of the country’s economic performance.
The Sensex is weighted by market capitalization and adjusted for free-float. It is reviewed twice a year, in June and December. Established in 1986, Sensex is India’s oldest stock market index and is managed by Standard & Poor’s (S&P). Investors and analysts use it to track market trends, economic cycles, and sector-wise performance in India.
What is the full form of SENSEX?
The full form of SENSEX is Stock Exchange Sensitive Index. SENSEX is the oldest stock market index in India, associated with the Bombay Stock Exchange (BSE). It is a free-float, market-capitalization-weighted index made up of 30 strong and well-established companies listed on the BSE. These companies, known as blue-chip companies, are among the most successful and heavily traded stocks in India, representing key industries across the country.
What is SENSEX?
The Standard & Poor’s Bombay Stock Exchange Sensitive Index (S&P BSE SENSEX), commonly known as SENSEX, is the key benchmark index of the Bombay Stock Exchange (BSE) in India. It tracks the performance of the Indian stock market using the free-float market capitalization weighted method. This means each stock’s weight in the index is based on its market value compared to the total value of all 30 companies in the index. SENSEX is one of the most followed indices in India and serves as a reliable indicator of the overall health and trends of the Indian stock market.
History of the Sensex
The BSE Sensex experienced its biggest single-day drop of 12.7% on April 18, 1992, following reports of a financial scam where a senior broker misused funds from the banking sector to invest in stocks.
After India’s economic liberalization in 1991, the Sensex showed strong growth. Its biggest surge came in the 21st century, climbing from over 5,000 points in early 2000 to over 42,000 points by January 2020. This rise was largely driven by India’s fast-growing economy, which was among the fastest in the world for many years.
A major reason for this growth has been the rise of India’s middle class. Studies suggest that by 2030, around 80% of Indian households will be middle-income, up from 50% in 2019. The growing middle class plays a key role in boosting consumer spending.
However, in recent years, India’s economic growth has slowed, hitting a decade-low in 2019. The COVID-19 pandemic in early 2020 further impacted the economy, creating uncertainty about future growth.
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Workings of SENSEX
The S&P BSE SENSEX, also called SENSEX, is a stock market index of the Bombay Stock Exchange (BSE) in India. It is calculated using the free-float market capitalization method, which means it shows the total market value of the top 30 actively traded companies, compared to a base year. The base year for SENSEX is 1978-79.
How SENSEX is Calculated:
- First, the market capitalization of each of the 30 companies is calculated by multiplying the number of shares by the current market price.
- The total market capitalization of all 30 companies is added together.
- This total is divided by a special divisor that adjusts for changes like bonus shares or stock splits, keeping the index value accurate.
The SENSEX is updated regularly to include the most active and top-performing companies, ensuring it reflects the real situation of the stock market. Investors in India and worldwide follow the SENSEX as a main indicator of how the Indian stock market is performing.
Corporate list Mentioned in SENSEX
- Lupin
- ITC Limited
- Infosys Limited
- ICICI Bank Limited
- HDFC Bank Limited
- Hindustan Unilever Limited
- Hero MotorCorp Limited
- Tata Steel Limited
- Wipro Limited
- Tata Motors Limited
- State Bank of India
- Sun Pharmaceutical Industry Limited
- Tata Motors- DVR Ordinary
- Tata Consultancy Services Limited
- Kotak Mahindra Bank Limited
- Mahindra and Mahindra Limited
- Maruti Suzuki India Limited
- Larsen and Toubro Limited
- Reliance Industries Limited
- NTPC Limited
- Power Grid Corporation of India Limited
- Oil and Natural Gas Corporation Limited
- Viola
- Housing Development Finance Corporation Limited
- Asian Paints Limited
- Bajaj Auto Limited
- Axis Bank Limited
- Bharti Airtel Limited
- Adani Ports and Special Economic Zone Limited
- Coal India Limited
- Reddys Laboratories Limited.
Benefits of SENSEX
- Improves Company Reputation: Being part of the SENSEX increases a company’s visibility and boosts its reputation in the market.
- Higher Share Value: It raises demand for the company’s shares and helps improve its market valuation.
- Recognizes Top Companies: Companies listed in SENSEX are seen as top performers, which adds more respect and recognition to their name.
- Easier to Raise Capital: Companies in SENSEX find it easier to raise money by selling shares to the public.
- More Growth Opportunities: Listing on SENSEX opens doors to growth through mergers, business expansions, and acquisitions.
- Employee and Risk Benefits: It also creates opportunities for better employee performance, proper risk management, and incentive programs.
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FAQs on SENSEX Full Form
What is Sensex and Nifty?
Sensex is the benchmark index of the Bombay Stock Exchange (BSE), consisting of 30 top-performing companies. Nifty is the benchmark index of the National Stock Exchange (NSE), which includes 50 leading companies from different sectors.
What is the full form of Sensex?
The full form of Sensex is Stock Exchange Sensitive Index. It reflects the overall performance of 30 major companies listed on the BSE.
Who owns Sensex?
Sensex is owned and managed by the Bombay Stock Exchange (BSE), which is Asia oldest stock exchange.
How to calculate Sensex?
Sensex is calculated using the free-float market capitalization method. It reflects the weighted market value of 30 selected companies relative to a base year (1978-79).
What does Standard & Poor's Bombay Stock Exchange Sensitive Index represent?
It represents the performance of the top 30 financially sound companies listed on BSE, acting as a barometer of India’s stock market performance.
Who owns Standard & Poor's Bombay Stock Exchange Sensitive Index?
The index is managed by the Bombay Stock Exchange (BSE) in collaboration with Standard & Poor (S&P), a global financial services company that lends its name for credibility and indexing standards.
