Sensex: Meaning, History and Companies

Sensex is the main stock market index of Bombay Stock Exchange (BSE). The full form of Sensex is ‘Sensitivity Index’. It can also be referred to as ‘S&P Bombay Stock Exchange Index’ or ‘BSE 30’.

Sensex is one of the two major indices in India, the other is NIFTY which belongs to the National Stock Exchange (NSE).

Sensex consists of 30 large and well-established companies that are listed on the Bombay Stock Exchange. Over a period of time, companies that are a part of the Sensex can be dropped and new companies can be added – depending on the financial performance and other factors.

Sensex is widely considered to be the ‘pulse of the Indian stock market’ as it gives a clear indication of how the stock market is performing. If the Sensex goes up, the market is considering to be performing well. Whereas if the Sensex crashes, most listed stocks would’ve fallen too.

The Sensex is a benchmark for investors, including mutual funds. The goal of most mutual fund managers and individual investors is to outperform the index over a period of time.

Companies in Sensex

1Reliance IndustriesConglomerate
2Tata Consultancy ServicesIT
3HDFC BankPrivate Bank
4HDFCFinance (Housing)
5Hindustan UnileverHousehold Products
6ICICI BankPrivate Bank
7Kotak Mahindra BankPrivate Bank
9State Bank of IndiaPublic Bank
10ITCCigarettes & FMCG
11Bajaj FinanceFinance (NBFC)
12Bharti AirtelTelecom
13Maruti SuzukiAutomotive
14Axis BankPrivate Bank
15Larsen & ToubroInfrastructure
16Asian PaintsPaint
17Oil and Natural Gas CorporationOil & Gas
18HCL TechnologiesIT
19Nestle IndiaConsumer Food
20UltraTech CementCement
23IndusInd BankPrivate Bank
24Sun PharmaceuticalPharmaceutical
25Power Grid Corporation of IndiaPower
26Bajaj AutoAutomotive
27Tech MahindraIT
28Mahindra & MahindraAutomotive
29Hero MotoCorpAutomotive
30Tata SteelSteel

History of Sensex

The base or starting value of Sensex was 100, starting from the date 1st April 1979. The Sensex was first compiled in 1986.

From 100, the Sensex has risen to 41,500 today (30 December 2019). In 41 years, Sensex has given returns of nearly 16%.

Sensex: Meaning, History and Companies 1
Sensex from the time it was first compiled in 1986 to 2020. The overall trend has been upwards, even through in between the market has crashed several times in 1992, 2008 etc.

How companies are selected for Sensex:

  • A company listed on the BSE should figure in the Top 100 companies listed by full market capitalisation.
  • The company should have been traded on each and every trading day for the last one year.
  • The stock should be among the Top 150 companies listed by average number of trades per day for the last one year.
  • The stock should be among the Top 150 companies listed by average value of shares traded per day for the last one year.
  • The company should have been listed atleast one year ago on the BSE.

Apart from the above, a qualitative analysis is performed by a committee appointed by the BSE to ensure the company has an acceptable track-record.

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