Updated March 1, 2023
SENSEX (Stock Exchange Sensitive Index)
The full form of SENSEX is a stock exchange-sensitive index that is also called an indicator. This study of indicators is to know about the maximum stock number and its movement. These are never stable. They may go up and down depending on the market. Putting into simpler words, the SENSEX is the index or indicator for companies listed on the Bombay Stock exchange.
Companies Included in SENSEX
Here, we will go through the weighted index of 30 chosen companies. All of these are on overall performance, and financial stability and include –
- Tata Steel Limited
- Tata Motors DVR Ordinary
- Tata Consultancy Services Limited
- Lupin
- Wipro Limited
- Sun Pharmaceutical Industry Limited
- State Bank Of India
- Kotak Mahindra Bank Limited
- Mahindra and Mahindra Limited
- Larsen and Toubro Limited
- Maruti Suzuki India Limited
- NTPC Limited
- Reliance Industries Limited
- Oil and Natural Gas Corporation Limited
- Power Grid Corporation of India Limited
- Viola
- ICICI Bank Limited
- ITC Limited
- HDFC Bank Limited
- Infosys Limited
- Hero MotorCorp Limited
- Hindustan Unilever Limited
- Asian Paints Limited
- Housing Development Finance Corporation Limited
- Bajaj Auto Limited
- Bharti Airtel Limited
- Axis Bank Limited
- Coal India Limited
- Adani Ports and Special Economic Zone Limited
- Reddys Laboratories Limited
What is the Purpose of SENSEX?
SENSEX has a broader purpose and view on the stocks listed on the Bombay Stock Exchange. It provides a performance overview and measures the ability of a stock to induce or perform movements. These movements affect the index that one can use to evaluate and indicate financial strength inside a stock market.
Altogether it indicates a movement in the market to measure the performances of the trending stocks. Majorly these 30 trending stocks are on liquidity and market cap in the SENSEX or the stock exchange-sensitive index.
Important Points to Note about SENSEX
- The SENSEX is an Indian stock market index that is based on free-float market capitalization. These are the weighted average of 30 companies (mentioned above) on the Bombay Stock Exchange. They are the largest and most actively traded stocks (BSE).
- The Sensex value represents the overall performance of the Indian stock market and serves as a barometer for the Indian economy. The value of the Sensex changes as the prices of the individual stocks. These comprise the index change that reflects the market’s supply and demand dynamics.
- When investors purchase these stocks, demand, and prices rise. It further causes the Sensex to rise.
- When investors sell their stocks, demand, and prices fall. It further causes the Sensex to fall.
- During market hours, the Sensex updates every 15 seconds. The update further reflects the overall performance of the Indian stock market. The Sensex value provides insight into the Indian economy. For investors who want to make informed investment decisions use it as a calculator.
Advantages of SENSEX
There are several advantages of SENSEX exclusively used by market investors.
#1 Market Performance Benchmark
The Sensex serves as a performance benchmark for the Indian stock market. It further provides investors with a single, easily comprehensible metric that further helps to know the market’s overall condition.
#2 Easy Investment Decision Tool
The Sensex value provides insight into the state of the Indian economy. This helps investors in making informed investment decisions and provides them with a better perspective on the market performance.
#3 Allows for Index-based Investment
The Sensex serves as a foundation for index-based investment products. These include index funds and exchange-traded funds that help to track the overall market performance, and investment benefits.
#4 Diversification
The Sensex index includes 30 of India’s largest and most active traded stocks. This further allows investors to diversify their portfolios and reduce risk.
#5 International Recognition
The Sensex is widely recognized both domestically and internationally. It is a benchmark of the Indian stock market and makes international trade and tracking easier. It further helps to understand the Indian investment market.
Working of SENSEX
- The stock selection is made and chosen based on criteria such as market capitalization, liquidity, and representation of various economic sectors.
- Further, calculate the Market capitalization for each stock by multiplying the number of outstanding shares by the current market price.
- Market capitalization adjusts for free float where each stock is to account for the proportion of shares. These are readily available for trading, and called “free float.”
- The Sensex value is the weighted average of the free float market capitalizations. These are of the index’s 30 given stocks that adjust to account for all corporate actions. These may include stock splits or dividends.
Final Thoughts – Full Form of SENSEX
Overall, the Full Form of SENSEX (Stock Exchange Sensitive Index) is a valuable source of information and a useful tool for market investors. It further assists them in making informed investment decisions. It also assesses the performance of the Indian stock market and the Indian economy.
