The BSE Sensex, India's key stock market benchmark, comprises 30 of the largest and most actively traded stocks on the Bombay Stock Exchange. It serves as a vital financial indicator and reflects India's economic health. Introduced in 1986, it features prominent companies from various sectors, known as "blue-chip" stocks, making it a float-adjusted, market capitalization-weighted index. The acronym "BSE Sensex" was coined by analyst Deepak Mohanti, and it's also called the "BSE 30" due to its composition of the top 30 most traded companies. The index is reviewed biannually in June and December.
Sensex is a weighted index, with some companies having more influence on its value than others. It's calculated using the free-float capitalization method, which, like market-capitalization weighting, weights companies based on their share of the index's total market capitalization. The key distinction is that only freely tradable shares are considered, excluding restricted shares and those held by company insiders from the calculations.
Company Performance: Earnings reports and news about the 30 Sensex companies influence the Sensex. Macroeconomic Factors: Changes in GDP, inflation, and government policies impact the Sensex. Global Events: Global market developments affect the Sensex significantly. Public Sentiments: Investor confidence and outlook influence the Sensex. Foreign Capital Investments: Foreign investments and institutional investor faith in India impact the Sensex.
Sensex often serves as a stock market benchmark for investors to gauge their investment decisions and portfolio performance. If your portfolio consistently outperforms the Sensex, it's a positive sign for your investments. However, it's crucial to recognize that the Sensex might not always align with your individual investment goals. It's a general market indicator, while your financial objectives may be unique. Therefore, it's essential to conduct thorough research on stocks and align your investments with your specific goals before making decisions.