| Sensex is the name coined for the Bombay stock | | | | -The particular stock must be amongst 10 top |
| exchange sensitive index. Sensitive index abbreviated | | | | companies whose stocks have been traded every |
| as Sensex, is the yardstick index for stock markets | | | | day in the financial year on the BSE. |
| in India. The sensex is designed scientifically based on | | | | -On the Bombay stock exchange listings the particular |
| a particular universally accepted methodology. It was | | | | stock must have its listing since a year. |
| first put together in the year 1986 and with 30 | | | | - The company must have a good and sound record |
| ingredient stocks. These 30 stocks symbolized | | | | in the eyes of the committee. |
| gigantic and rich organisations. 1978-1979 was taken | | | | SENSEX calculation strategy and method. |
| as the base year and the base value was taken as | | | | "Free-float Market Capitalization" method is used to |
| 100. The same method continues till date. It is in | | | | calculate the sensitive index. According to this |
| face, very popular globally. | | | | method, the sensex valuation mirrors the free float |
| Whenever we express the state of the market, we | | | | market value of the 30 stock ingredients relative to |
| look for the sensex reading. It is the most | | | | the (1978-79) base year. When we multiply the |
| comprehensive indicator of the market. The Sensex | | | | number of shares the company has issued by the |
| echoes the price movements of various stocks and | | | | price value of the stock of the same company we |
| also indicates market soundness. Sensex rises and | | | | arrive at the Market Capitalization of the particular |
| falls in a market. In case the sensex rises the | | | | company. Later on we multiply it further with free |
| investors or traders in the market can look forward | | | | float factor to come up with free-float market |
| to booking profits. While a sensex on the downside | | | | capitalization. The Free float market capitalization of |
| may lead to a loss for investors. Therefore if the | | | | the 30 key corporations is further divided by the |
| corporations listed on the stock market are financially | | | | Index Divisor, a number. The index number is the sole |
| and managerially sound. | | | | link to the first and base price of the sensitive index. |
| Sensex- Ingredient companies. | | | | The sensex journey |
| The sensex in India is made up of 30 companies | | | | The sensex has been on the increase ever since |
| which have a direct bearing on the economy. These | | | | early history. From 1000 points on July 25thg, 1990 to |
| 30 companies are selected by a group of | | | | historic 10000 mark on February 7 th, 2006 after |
| academicians, fund managers, financial journalists and | | | | which it rose to 14000+ on December 5th |
| many other stock market participants. They form | | | | 2006.However it has been fluctuating between 13000 |
| the index committee. | | | | to 14000 since then. But there have been several |
| Parameters for selection of the 30 companies. | | | | downfalls due to high volatility. In such cases the |
| -The stock of a company must be traded all through | | | | government adapts policies that are friendly to |
| out the financial year to be amongst the 30. | | | | investors and curbs down panic. |