Home Financial & Banking Terms What is BSE SENSEX?

What is BSE SENSEX?

BSE SENSEX

BSE Sensex is the abbreviation used for Bombay Stock Exchange’s Sensitive Index. It was launched in 1986. BSE Sensex measures the ability of a particular stock to influence movements in the index. The base value of the index is taken to be 100 points and the base year is 1978-79. Bombay Stock Exchange Sensitive Index marks the performance of thirty largest stocks that are registered on Bombay Stock Exchange. These stocks are chosen according the value of their free float shares.

The number of stocks have remained the same since the establishment of BSE but the composition changes from time to time on the basis of volume and frequency of trading, market capitalization and volatility. Until the National Stock Exchange was formed in the 1990s, BSE Sensex was the only paradigm index for the stock market in India. BSE Sensex is also known as BSE 30 or simply Sensex.

Calculation

The index is calculated through a variation of market capitalization method i.e. a free float capitalization method. The shares which are readily available for trading i.e. the float is used instead of the outstanding shares. Even though the index only monitors a small percentage of total stocks traded, about 1/5^th of the market capitalization of the entire stock exchange are comprised in the index.

1 COMMENT

Ameena K March 16, 2016 at 5:17 am

This is a really useful post. This again reminds me of how ignorant we are on gathering information about small daily using words. The history of Bombay stock exchange was interesting to read. This is a sweet and small bite of information that can be remembered. Thanks author, for the post!