What is Sensex?
Sensex is which is also know as S&P BSE Sensex is an Index that is created by BSE stock exchange which is the oldest stock exchange in India. It’s often found that many people generally measure the performance of stock market by checking the performance of Sensex and Nifty!
In this article we will discuss about what is Sensex and it’s details around it!
What is Sensex Index?
The Sensex consist of 30 stocks which are part of the index. Like Sensex, BSE has lot of other indexeslisted in the BSE stock exchange.
What is the history of Sensex?
When was Sensex launched? – The Sensex index was launched on 1st January 1986, how ever the index value was derived from 3rd April 1979 by back-tested mechanism. The Sensex Index consists of 30 stocks.
What is the criteria for the stocks to be part of Sensex?
There are few criteria for a stock to be part of BSE Sensex, they are
- Stocks should be listed for minimum 6 months in BSE stock exchange
- The stock should have traded for all the trading days for the last 6 months
- If the stock has a DVR then the DVR aggregated with the company’s common stock and index construction is done based on the aggregated company
- Stocks meeting above criteria then qualifies for the selection and then the top 75 companies out the list are identified based on their average six month float adjusted market capitalisation.
- All companies meeting the eligibility factors are ranked again based on their average six month total market capitalisation. The top 75 are identified.
- All companies identified based on steps 4 and 5 are then combined and sorted based on their annualised traded value. Companies with a cumulative annualised traded value greater than 98% are excluded.
- The remaining companies are then sorted by average six-month float-adjusted market capitalisation. Companies with a weight of less than 0.5% are excluded.
- The remaining companies from step 7 are then ranked based on their average six-month float adjusted market capitalisation, and are selected for index inclusion according to the following rules:
a. The top 21 companies (whether a current index constituent or not) are selected for index inclusion with no sector consideration.
b. Existing constituents ranked 22 – 39 are selected in order of highest rank until the target constituent count of 30 is reached.
c. If after this step the target constituent count is not achieved, then non-constituents ranked 22 – 30 are selected by giving preference to those companies whose sector is underrepresented in the index as compared to the sector representation in the S&P BSE All Cap.
d. If after this step, the target constituent count is still not achieved, non-constituents are selected in order of highest rank until the target constituent count is reached.
What is Sensex company list and their weightage
Below are the Sensex company list and their approximate weightage
|BSE Scrip Code||Company||Weight in Sensex (%)|
Sensex Historical performance
Below picture depicts the historical performance of Sensex since 1980:-
What is the importance of BSE Sensex in Indian stock market?
Sensex is the oldest index in Indian stock market. When people look at historic returns, they first look at returns of Sensex from 1980. The Sensex Index has given tremendous returns since 1980. In 1980, Sensex was close to 150 and in 2020 the Sensex is near 40000. This gives an indication of how in the long run investors can make a lot of money from stock market if they just stick to the investments in the long run!
Is Sensex a listed company?
Many people get confused between Sensex and BSE. Sensex is an Index which is part of BSE. BSE is a listed company in NSE which manages Sensex index.
How to invest in Sensex Index?
investors can directly in ETFs/Index funds which in turn track the Sensex index. Few of the ETFs/Index funds are as below:-
HDFC Index Sensex
HDFC Sensex ETF
ICICI Prudential Sensex ETF
ICICI Prudential Sensex Index Fund
IDFC Sensex ETF
Kotak Sensex ETF
LIC MF Exchange Traded Fund – Sensex
LIC MF Index Sensex
Nippon India ETF Sensex
Nippon India ETF Sensex Next 50
Nippon India Index Sensex
SBI ETF Sensex
SBI ETF Sensex Next 50
Tata Index Sensex
UTI Sensex Exchange Traded Fund
UTI S&P BSE Sensex Next 50 ETF
What is the difference between Sensex and Nifty?
Sensex and Nifty are 2 different stock indexes which are created by 2 different stock exchanges. Sensex is created by BSE which consists of 30 stocks and Nifty a.k.a nifty 50 is created by NSE consists of 50 stocks in its Index.