What is Sensex?

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What is sensex
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Introduction

• In the stock market parlance, Sensex is a pretty
  common term. So, what is Sensex? The term Sensex
  is the brainchild of by stock market expert
  Deepak Mohoni. A blend of two terms, sensitive
  and index, Sensex constitutes 30 of the largest
  and most actively traded stocks on the Bombay
  Stock Exchange (BSE).
• These stocks belong to some of the biggest
  companies in India, representing various sectors
  of the economy. BSE Sensex was first published on
  1st January 1986 and is often regarded as the
  pulse of stock markets in India.

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How is sensex calculated

• Now that you know what is Sensex, heres how its
  value is calculated. The calculation of Sensex is
  done by the free-flow method. This method takes
  into account the proportion of shares that can be
  readily traded.
• Then market capitalization of all the 30
  companies, whose stocks are traded, is
  calculated, post which the BSE determines a
  free-float factor. It helps in determining the
  free-float market capitalization and then ratio
  and proportion are used on the base index of 100
  to arrive at the value of Sensex. The formula is
  as follows
• Sensex (Total free float market
  capitalization/Base market capitalization) X Base
  Index Value

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conclusion

• The Sensex and the Nifty are two of the most
  common terms you hear in the stock market. So the
  next time you hear that the Sensex has gone up by
  100 points or the Nifty has gone down by 200
  points, you know how the value is calculated and
  more importantly, what the key takeaway is.

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