What is Sensex?

C.I November 23, 2024

SENSEX

Sensex, or Sensitive Index, is India's oldest and most widely followed stock market index. It represents the Bombay Stock Exchange (BSE) and comprises the top 30 liquid and diversified stocks across various sectors.




Key Features

  1. Benchmark Index: Sensex is a benchmark for Indian equity markets.

o        2. Market Capitalization-Weighted Index: Stocks are weighted based on their market                                                                                                  capitalization.

o        3. Diversified Portfolio: Represents various sectors, including IT, banking, pharma, auto, and more.

o        4. Liquidity: Constituent stocks are highly liquid, ensuring market efficiency.

 

Calculation Methodology

o   1. Free Float Market Capitalization: Stocks' market capitalization is calculated based on                                                                                      outstanding shares.

o   2. Weightage: Stocks are weighted according to their market capitalization.

o   3. Index Value: Calculated using the aggregate market value of constituent stocks.


 

Sensex Constituents

Some prominent stocks include:

 COMPANIES                                    SECTOR’S

1. Reliance Industries                            (Oil and Gas)

2. Infosys                                                   (IT)

3. HDFC Bank                                          (Banking)

4. Tata Consultancy Services ([TCS]      (IT)

5. Hindustan Unilever                           (Conglomerate)

6. ICICI Bank                                          (Banking)

7. Larsen & Toubro [L&T]                     (Engineering)

8. State Bank of India ([SBI]                  (Bank)

9. Bharti Airtel                                        (Telecom)

10. ITC                                                     (Cons non-Durable)

 

Benefits

o   1. Diversification: Spreads risk across sectors and stocks.  

    2. Liquidity: Facilitates easy buying and selling.

o   3. Benchmarking: Provides a standard for evaluating investment performance.

o   4. Index Funds and ETFs: Enables investment in Sensex through index funds and ETFs.

 

Historical Performance

Sensex has consistently grown, with:

·       1. CAGR (Compound Annual Growth Rate) has been at 16% since its inception.

·       2. All-time high: 85,918.25 (September 2024)

·       3. All-time low: 113.88 (June 1979).

 

**Investors can track Sensex's performance, invest in index funds/ETFs, or use it as a benchmark for their investment portfolios.


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