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Tracking rise and fall of Sensex? But how is Sensex calculated?

Many of us track the rise and fall of Sensex either for planning our investments or for just keeping ourselves updated about the market. But ever wondered what is Sensex and how is it calculated?

What is Sensex?

S&P Bombay Stock Exchange Sensitive Index (S&P BSE SENSEX), commonly referred to as Sensex, is India’s most tracked index to gauge the trend of Indian stock market. It measures the performance of the 30 largest, most liquid and financially sound companies across key sectors of the Indian economy that are listed at Bombay Stock Exchange (BSE).

History of Sensex

Sensex was launched on 1st January 1986 with the base year of 1978-79 and base value of 100. Until 1st September 2003, the Sensex was determined based on the Full Market Capitalization Method, however, from 1st September 2003 it is being calculated as per the Free Float Market Capitalization Method. Free-float market capitalization takes into consideration only those shares issued by the company that are readily available for trading in the market and excludes promoters' holding, government holding, strategic holding and other locked-in shares.

Formulas for calculating Sensex

Full Market capitalization = number of shares issued by the company * market price of the share

Free-float market capitalization = number of shares available for trading in the open market * market price of the share

Sensex = [free float market capitalization of 30 companies / market capitalization in 1978-79] * index value in 1978-79 (i.e.100)

Selection of 30 companies for Sensex

The basket of 30 companies is reviewed by the Index Committee every quarter. Any change i.e. addition or deletion of a company from the basket is announced six weeks in advance of the implementation of the change and takes effect from the Monday following the third Friday of March, June, September, and December.

The 30 companies which are currently part of Sensex

  1. Asian Paints Ltd
  2. Axis Bank Ltd
  3. Bajaj Finance Ltd
  4. Bajaj Finserv Ltd
  5. Bharti Airtel Ltd
  6. Dr Reddy's Laboratories Ltd
  7. HCL Technologies Ltd
  8. HDFC Bank Ltd
  9. Hindustan Unilever Ltd
  10. Housing Development Finance Corp
  11. ICICI Bank Ltd
  12. IndusInd Bank Ltd
  13. Infosys Ltd
  14. ITC Ltd
  15. Kotak Mahindra Bank Ltd
  16. Larsen & Toubro Ltd
  17. Mahindra & Mahindra Ltd
  18. Maruti Suzuki India Ltd
  19. Nestle India Ltd
  20. NTPC Ltd
  21. Power Grid Corp of India Ltd
  22. Reliance Industries Ltd
  23. State Bank of India
  24. Sun Pharmaceutical Industries Ltd
  25. Tata Consultancy Services Ltd
  26. Tata Steel Ltd
  27. Tech Mahindra Ltd
  28. Titan Co Ltd
  29. UltraTech Cement Ltd
  30. Wipro Ltd
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