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
|2||Tata Consultancy Services||IT|
|3||HDFC Bank||Private Bank|
|5||Hindustan Unilever||Household Products|
|6||ICICI Bank||Private Bank|
|7||Kotak Mahindra Bank||Private Bank|
|9||State Bank of India||Public Bank|
|10||ITC||Cigarettes & FMCG|
|11||Bajaj Finance||Finance (NBFC)|
|14||Axis Bank||Private Bank|
|15||Larsen & Toubro||Infrastructure|
|17||Oil and Natural Gas Corporation||Oil & Gas|
|19||Nestle India||Consumer Food|
|23||IndusInd Bank||Private Bank|
|25||Power Grid Corporation of India||Power|
|28||Mahindra & Mahindra||Automotive|
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%.
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.