What Is Sensex? and How Is It Formed?

Do you know what is Sensex (Information about Sensex)? You must have often read or seen the word Sensex on TV or in newspapers. Sometimes you see that Sensex has gone up so many points today and sometimes you see that Sensex has fallen so many points today.

Whenever you think of investing in the share market, then you must have come across Sensex in your mind. But you do not understand the meaning of these words because you do not know what is Sensex? So today’s post is focused on Sensex. Today, through this post of ours, we will know what is Sensex and what work is done through it?

We have told you in our earlier post what is Nifty. Today we are talking about Sensex. So Sensex is also similar to Nifty in a way but only 30 companies are listed in Sensex as compared to Nifty. Where Nifty is also called Nifty 50 because 50 companies are listed in it. Let us know in detail about what is Sensex.

What is Sensex?

The term Sensex was introduced by Deepak Mohani. This word is made up of the words sensitive and index. This means that it is a sensory index.

Sensex is the BenchMark index of our Indian Stock Market, which tells the rise and fall of the shares listed in BSE (Bombay Stock Exchange). Through this we get information about the performance of the 30 largest companies listed in it.

Talking about the Sensex, it is the oldest stock market index in India, which was started in 1986.

Sensex which is a stock market index and its most important job is to keep watching the price of all the shares of listed companies in the stock market and then after a day’s work give us an average value so that we can get listed in the stock market. It is easy to get information about the rise and fall in the prices of the shares of the companies.

Bombay Stock Exchange (BSE), which is the oldest stock exchange in India, has a total of 30 major Indian companies. If these companies are seen according to the market capitalization, then they are very big, it is currently 37% of the total Indian GDP.

These companies work in a way to set the trend of the Indian market. And in simple words, the index made to measure the prices of shares of big companies of India, which keeps an eye on the increasing and decreasing prices of the shares of these companies, is called Sensex.

How is Sensex formed?

Now we talked about what is Sensex? Now we will know how Sensex is made and by whom it is made, we will understand the process of its formation.

As we are well aware that Sensex is a part of Bombay Stock Exchange and Sensex is made up of shares of only thirty companies listed on Bombay Stock Exchange whereas the total number of companies listed on Bombay Stock Exchange. The figure is more than 6000.

When the Sensex is calculated, only the shares of 30 companies which are dominant in the market are included in it. The reason behind including the share prices of these 30 companies is that the shares of these 30 companies are the most bought and sold.

Second, it is the 30 largest companies, their market cap is almost half of all the shares listed on the stock exchange, which is a great achievement. The third reason is that these 30 companies are selected from 13 different sectors, these 30 companies are considered to be the biggest in their sector.

These 30 companies are selected by the index committee of the stock exchange, this committee consists of people from many sections, which can mainly include government, banks and eminent economists.

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How does the Sensex Increase or Decrease?

Sensex Its job is to provide us with stock information. It monitors the movements in the shares of 30 companies under it. If the value of the shares of the companies listed in the Sensex is increasing in the market, then the Sensex also rises and goes up.

On the other hand, if the value of shares of companies listed in the Sensex is falling in the market, then the Sensex also starts falling.

The most important reason for the price of shares going down and up is the performance of those companies. For example, if the company has launched a new and big project in the market, then there is a possibility that the price of the company’s shares will increase.

Similarly, if the company is going through some difficulty, then people want to leave it and the shares start selling in large quantities. Due to the high volume of the stock, the share price decreases and the Sensex starts coming down.

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