What Is BSE Sensex?
BSE SENSEX, or the Bombay Stock Exchange Sensitive Index, is one of the most important and widely followed indices in India. It tracks the performance of 30 of the largest and most actively traded companies on the Bombay Stock Exchange (BSE).
The BSE Sensex reflects the overall health of the Indian stock market and, by extension, the economy. It is a valuable tool for investors and traders to gauge market sentiment and make informed decisions.
- The BSE Sensex includes 30 major companies from various sectors such as IT, banking, energy, consumer goods, etc.
- It is calculated based on free-float market capitalization.
- BSE SENSEX helps in comparing the performance of the Indian market against global indices like the Dow Jones, FTSE, and NIFTY 50.
How Is BSE SENSEX Calculated?
The calculation of the BSE SENSEX involves a free-float market capitalization method. Here's a step-by-step breakdown of how it's calculated:
Step-by-Step Calculation Formula
The formula used for calculating BSE SENSEX is:
Sensex = (Sum of Free-Float Market Capitalization of all 30 companies / Base Market Capitalization) × Base Value
Let’s break it down:
- Free-Float Market Capitalization: This refers to the market value of a company's shares that are available for public trading. It excludes shares held by promoters, government, and other strategic investors.
- Base Market Capitalization: This is the market capitalization of the 30 Sensex companies at the time of the index's inception (1978–79), which is fixed and set to 100.
- Base Value: The base value is the initial value of the index when it was first calculated in 1979, which is set at 100.
Example Calculation
Imagine that the total market capitalization of all 30 companies in the Sensex is ₹10,000 crore. The base market capitalization at the time of index inception was ₹8,000 crore. The index would be calculated as:
Sensex = (₹10,000 crore / ₹8,000 crore) × 100 = 125
This means the BSE Sensex has increased by 25% since its inception.
30 Companies in BSE SENSEX
| Company | Sector |
|---|---|
| Reliance Industries | Energy |
| HDFC Bank | Banking |
| ICICI Bank | Banking |
| Infosys | IT |
| TCS | IT |
| ITC | FMCG |
| Bharti Airtel | Telecom |
| Axis Bank | Banking |
| Hindustan Unilever | FMCG |
| State Bank of India | Banking |
| Sun Pharmaceutical | Pharmaceuticals |
| Larsen & Toubro | Engineering |
| Wipro | IT |
| Asian Paints | Consumer Goods |
| Maruti Suzuki | Automobile |
| HCL Technologies | IT |
| Power Grid Corporation | Utilities |
| Tech Mahindra | IT |
| Bajaj Finance | Financial Services |
| NTPC | Energy |
| Tata Steel | Metals |
| UltraTech Cement | Cement |
| Adani Ports | Logistics |
| Dr. Reddy's Laboratories | Pharmaceuticals |
| Coal India | Energy |
| Mahindra & Mahindra | Automobile |
| Kotak Mahindra Bank | Banking |
| IndusInd Bank | Banking |
| Grasim Industries | Cement |
| Bajaj Auto | Automobile |
| Marico | FMCG |