What is Sensex and How is it Formed in Stock Market?
Hello friends, how are you, today I have a brand new post for you - Do you know What is Sensex? You may have read or seen the term Sensex on TV or in newspapers when you see it. You see Sensex up so many points today and sometimes you see Sensex down so many points today.
The current era is happening in the stock market so no one is behind. If you think of investing in the stock market, you must have thought about the Sensex. Tell me the truth - do you understand the meaning of these words or not know what Sensex is? So in today's post, I will discuss only the stock market Sensex. Today through this post we will know in detail what is sensex of the stock market world and what is done through it?
Let's know about this Sensex without delay. This Sensex is also similar to Nifty but only 30 companies are listed in Sensex. But Nifty is also called Nifty 50 because it has 50 listed companies. Let's know more about Sensex in today's post.
What is Sensex?
Share Market The term Sensex was first coined by Deepak Mohini. He formed this word by combining the sensitive and indicative words. This means that it is a sensitive indicator.
Sensex is India's oldest stock market index, launched in 1986. Our Indian stock market benchmark index measures the rise and fall of share prices listed on the BSE (Bombay Stock Exchange). Through this, we get all the information about the performance of the 30 largest companies listed in it.
Sensex is a very important stock market index and its most important function is that it monitors the share prices of all the listed companies in the stock market and then gives us an average price at the end of the day's work so that we know the complete information about the rise and fall in the share prices of the listed companies in the stock market. - Which this Sensex very easily shows us.
The Bombay Stock Exchange (BSE), the oldest stock exchange in India, lists a total of 30 major Indian companies. If you look in terms of market capitalization, these companies are huge, currently accounting for more than 37% of the total Indian GDP.
In a way, these companies work to set trends in the Indian market. If I put it in simple words, the index created to determine the price of shares of major companies in India, which monitors the rise and fall of the shares of these companies, is called Sensex.
How is Sensex formed?
I have just discussed what Sensex is in the above paragraph. Now we will know how this important index of the share market or stock market is created or Sensex was created and by whom it was created.
We have learned above that Sensex is a part of Bombay Stock Exchange and Sensex consists of share prices of only 30 companies listed in Bombay Stock Exchange but consists of more than 6000 companies listed in Bombay Stock Exchange that is Rs.
When the Sensex is calculated, the shares of the 30 prominent companies included in the Sensex are counted in it. The real reason for including the share prices of these 30 companies is that these 30 companies are very popular and the shares of these companies are the most traded.
Second, these 30 largest companies, with their market cap accounting for almost half of all shares listed on stock exchanges, occupy a huge space. The third reason is that among 13 different sectors, these 30 companies are considered the largest in their sector. So we understood the matter correctly - no boss?
These 30 major companies are selected by the stock exchange index committee, which includes people from many sectors, including governments, banks, and well-known economists.
How does Sensex increase or decrease?
Now that we know what Sensex is then how it is constructed. Now know how Sensex increases or decreases? Sensex's only main function is to give us information about stocks - which means stocks are up or down. It always monitors the fluctuations of shares of 30 companies. Now the real thing is that if the stock price of the company listed in Sensex goes up in the market, then the Sensex also goes up and up. Conversely, if the share prices of companies listed in the Sensex continue to fall in the market, the Sensex also starts falling.
The most important reason for the rise and fall of share prices is the performance of those companies. For example, if the company has launched a new and big project in the market, then the share price of the company is likely to rise because the company has entered a new market.
On the contrary, if a company is going through some difficulties, people want to leave it and the shares start selling in huge quantities. Due to the high volume of shares, the share price fell and Sensex started moving down. Did you guys get the point - let me know but I will wait.
If I can't explain you completely and correctly, then you may go to the share market and fall into losses. So I am again telling you to go to the share market after reading the entire post carefully.
30 companies are selected based on which key aspects?
Factors that the Index Committee keeps in mind while selecting the 30 companies for selection in the Sensex are:
1) Shares of those companies should be listed on the stock exchange for at least 1 year or more.
2) It is mandatory to buy and sell stocks of that company on the specified day when the stock market is open within the last year
3) These companies must be among the top 150 companies in the country by average number of trades and value per day.
These factors are considered by the index committee for ranking.
Which are the top 30 best-performing companies?
The 30 companies included in the Sensex were included in the same way as the first 30 companies were included in 1986. Due to the popularity of these companies in the stock market, there is always a demand for the shares. Such companies are called "blue chip" companies.
At present, I have given below the list of a total of 31 companies included in BSE i.e. Sensex of the Bombay Stock Exchange.
1) Adani Ports and Special Economic Zone Ltd.
2) Asian Paints
3) Axis Bank Ltd.
4) Bajaj Auto Limited
5) Bharti Airtel Limited
6) Cipla
7) Coal India Limited
8) Dr. REDDY'S LABORATORIES LIMITED
9) HDFC Bank Limited
10) Hero MotoCorp Ltd.
11) Hindustan Unilever Ltd.
12) Housing Development Finance Corporation Ltd.
13) ICICI Bank Limited
14) ITC
15) Infosys Limited
16) Kotak Mahindra Bank Ltd.
17) Larsen & Toubro Limited
18) Lupine
19) Mahindra & Mahindra Ltd.
20) Maruti Suzuki India Limited
21) NTPC Ltd.
22) Oil and Natural Gas Corporation Ltd.
23) Power Grid Corporation of India Limited
24) Reliance Industries Limited
25) State Bank of India
26) Sun Pharmaceutical Industries Ltd.
27) Tata Consultancy Services Limited
28) Tata Motors
29) Tata Motors – DVR Ordinary
30) Tata Steel Limited
31) Wipro Limited
Currently, in this era of the share market, these companies are ruling the Indian market hugely. All these companies are leading companies in their respective sectors and each company, in a way, represents its sector in the Sensex.
Advantages of Sensex
The biggest advantage of this Sensex is that through this the investor can know and understand all the happenings and future changes in the market and invest their money accordingly - he can buy shares with complete knowledge.
We also have some benefits from Sensex which is not directly impacting or benefiting much but indirectly quite effective. The movement of the rupee fluctuates according to the market and when the rupee gets stronger, things become cheaper in the country. Let friends know about some of its diverse benefits.
1) When companies in the share market see Sensex rising, investors are also asked to invest money in such companies and then collect a lot of money from the investors, resulting in the growth and expansion of the companies. Whenever a company expands like this, it needs new people, so in such a situation they employ more people and this helps in reducing unemployment.
2) When the stock market is good and the Sensex goes high, many foreign investors start coming to our country and when they invest money in Indian companies, the rupee appreciates a lot. And the rupee strengthened against foreign currencies. You see when the rupee gets stronger, things start getting very cheap. For example, due to the appreciation of the rupee, goods imported from abroad are available at lower prices than before.
The Indian stock market was worth only one thousand when it started in 1990, but today it is worth more than 30,000. Hope it will reach more new highs in the future and help investors to earn more profit.
Friends if you are not aware of this market behavior then the share market can be totally a risky investment for you. Invest in the stock market carefully and get complete information before investing. We hope you liked this Sensex-related information.
I hope you understand What is this Sensex of the share market is. I request all the readers of my blog to share this information with your neighbors, relatives, and friends so that awareness is created among us and everyone benefits from it. The more you share the posts, the more unknown information I will bring to you, my interest in writing posts will increase in me.
If you find any gap in my post or some valuable information to add, please give your feedback in the comment box and help us to fill that gap. Stay well and stay healthy. See you in a new post on the News Lekhak Blog.
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