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What is SENSEX?
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invariably leads to the word/term known as SENSEX. But what is it really? SENSEX ...

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06-02-09, 05:49 PM #1

just4kix
What is SENSEX?
Guardian Angel
A glance through Indian Stck Market invariably leads to the
word/term known as SENSEX. But what is it really?

SENSEX is the short term for the words "Sensitive Index" and is
associated with the Bombay (Mumbai) Stock Exchage (BSE).

What is it?
The SENSEX was first formed on 1-1-1986 and used the market
capitalization of the 30 most traded stocks of BSE. The base was
Join Date: Dec 2007 1979 and taken as 100. The 30 scrips of 1986 and no more the
Location: Pune same - some have been removed while some have been added.
Posts: 10,446 At irregular intervals, the Bombay Stock Exchange (BSE)
Blog Entries: 6 authorities review and modify its composition to make sure it
Rep Power: 25 reflects current market conditions.

Today the Sensex constitutes of the following companies:

Company Name (Industry)

1. ACC (Cement - Major)
2. Bharti Airtel (Telecommunications - Service)
3. BHEL (Engineering - Heavy)
4. DLF (Construction & Contracting - Real Estate)
5. Grasim (Diversified)
6. HDFC Bank (Banks - Private Sector)
7. HDFC (Finance - Housing)
8. Hindalco (Aluminium)
9. HUL (Personal Care)
10. ICICI Bank (Banks - Private Sector)
11. Infosys (Computers - Software)
12. ITC (Cigarettes)
13. Jaiprakash Associates (Construction & Contracting - Civil)
14. Larsen & Toubro (Diversified)
15. Mahindra and Mahindra (Auto - Cars & Jeeps)
16. Maruti Suzuki (Auto - Cars & Jeeps)
17. NTPC (Power - Generation/Distribution)
 18. ONGC (Oil Drilling And Exploration)
19. Ranbaxy Labs (Pharmaceuticals)
20. Reliance Communications (Telecommunications - Service)
21. Reliance Industries Limited (Diversified)
22. Reliance Infrastructure (Power - Generation/Distribution)
23. State Bank of India (Banks - Public Sector)
24. Sterlite Industries (Metals - Non Ferrous)
25. Sun Pharma (Pharmaceuticals)
26. Tata Motors (Auto - LCVs/HCVs)
27. Tata Power (Power - Generation/Distribution)
28. Tata Steel (Steel - Large)
29. TCS (Computers - Software)
30. Wipro (Computers - Software)

Click here for a history of Sensex companies.

How is the Sensex calculated?

Sensex is calculated using the "Free-float Market Capitalization"
methodology. As per this methodology, the level of index at any
point of time reflects the Free-float market value of 30
component stocks relative to a base period.

The market capitalization of a company is determined by

multiplying the price of its stock by the number of shares issued
by the company. This market capitalization is further multiplied
by the free-float factor to determine the free-float market
capitalization.

The base period of Sensex is 1978-79 and the base value is 100
index points. This is often indicated by the notation 1978-
79=100. The calculation of Sensex involves dividing the Free-
float market capitalization of 30 companies in the Index by a
number called the Index Divisor.

The Divisor is the only link to the original base period value of
the Sensex. It keeps the Index comparable over time and is the
adjustment point for all Index adjustments arising out of
corporate actions, replacement of scrips etc.

What is Free-Float Market Capitalization?

Many different types of investors hold the shares of a company!
The Govt. may hold some of the shares. Some of the shares may
be held by the “founders” or “directors” of the company. Some
of the shares may be held by the FDI’s, etc.

Now, only the “open market” shares that are free for trading by
anyone. These are called the “free-float” shares. When we are
calculating the Sensex, we are interested in these “free-float”
shares!

A particular company, may have certain shares in the open

market and certain shares that are not available for trading in
the open market. According the BSE, any shares that DO NOT
fall under the following criteria, can be considered to be open
market shares:
• Holdings by founders/directors/ acquirers which has
control element
• Holdings by persons/ bodies with "controlling interest"
• Government holding as promoter/acquirer
• Holdings through the FDI Route
• Strategic stakes by private corporate bodies/ individuals
• Equity held by associate/group companies (cross-
holdings)
• Equity held by employee welfare trusts
• Locked-in shares and shares which would not be sold in
the open market in normal course.

Sensex Calculation

a) Find out the “free-float market cap” of all the 30 companies

that make up the Sensex!
b) Add all the “free-float market cap’s” of all the 30 companies!
c) Make all this relative to the Sensex base. The value you get is
the Sensex value!

To explain this further:

• Suppose that the Sensex was made up of two companies,
A and B.
• Company A, had 100 (free-float) shares in the market in
1979 and the price of Rs. 10. Market cap = Rs. 1000
• Company B, had 200 (free-float) shares in the market in
1979 and the price of Rs. 15. Market cap = Rs. 3000
• So the Sensex had a total market cap of Rs. 4000 in 1979
and this is taken as index value = 100
• Today company A has 1000 (free-float) shares and the
current price is Rs. 150, while company B has 5000 (free-
float) shares at Rs. 120. Hence market cap = Rs. 150,000
+ Rs. 600,000 = Rs. 750,000.
• So the equation is:
Market Cap of 4000 = Sensex value 100
Then, Market cap of 750,000 = ?
Ans: today's Sensex value will be 18750.
 Sources: Various

Trivia:

a) What is the full form of DLF?

b) What is full form of ITC? What was its full name before?
c) What is largest fall of the Sensex in % terms? When was it
recorded?
d) What is largest gain of the Sensex in % terms? When was it
recorded?
e) Which company has the highest market capitalization in the
Sensex?

p/s. Do not cheat please.

__________________

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Last edited by just4kix; 06-02-09 at 07:44 PM. Reason:

Automerged Doublepost

06-02-09, 05:54 PM #2

Rameshjeee
Good to be Back
Thanks for this wonderful article..Got some idea about the
Join Date: Aug 2008 Sensex.
Location: Bangalore
Age: 27 Need to spread some repo...
Posts: 3,010
Rep Power: 11

06-02-09, 06:02 PM #3

just4kix
Guardian Angel
 Anyone for trivia answers?

Join Date: Dec 2007

Location: Pune
Posts: 10,446
Blog Entries: 6
Rep Power: 25

06-02-09, 06:03 PM #4

Rameshjeee
Good to be Back
Quote:
Join Date: Aug 2008
Location: Bangalore
Age: 27 Originally Posted by just4kix
Posts: 3,010 Anyone for trivia answers?
Rep Power: 11

06-02-09, 06:05 PM #5

just4kix
Guardian Angel
Check the last part of my article.

Join Date: Dec 2007

Location: Pune
Posts: 10,446
Blog Entries: 6
Rep Power: 25

06-02-09, 06:13 PM #6

Rameshjeee
Good to be Back
DLF - Delhi Leasing and Finance
Join Date: Aug 2008 ITC - Imperial Tobacco Company of India Limited
Location: Bangalore
Age: 27 c) What is largest fall of the Sensex in % terms? When was it
Posts: 3,010 recorded?
Rep Power: 11 May 18, 2006: 826 points (6.76 per cent)

Last edited by Rameshjeee; 06-02-09 at 08:22 PM. Reason:

Answer corrected

06-02-09, 07:20 PM #7

saurav_k
Guest
Another Brilliant Article Kixi.:thumbup: Reps+. Rated 5/5.
Posts: n/a
Quote:

Originally Posted by Rameshjeee

c) What is largest fall of the Sensex in % terms? When was it
recorded?
Jan 21, 2008 --- 1,408.35 points

did you know the exact numbers? BTW, j4k asked for %.

06-02-09, 07:48 PM #8

just4kix
Guardian Angel
 For this article, I cannot claim the entire credit. I did some
research also.

Here is another intersting article for those who are historically

minded:

The Hindu Business Line : Sensex 100 & 10,000: A dramatic story

Last edited by just4kix; 06-02-09 at 07:48 PM. Reason:

Join Date: Dec 2007 Automerged Doublepost
Location: Pune
Posts: 10,446
Blog Entries: 6
Rep Power: 25

06-02-09, 07:59 PM #9

The One
Guest
Another brilliant thread from kixi....:thumbup1:
Posts: n/a
Can't repo you now, have to spread some.

@Rameshjee

If you knew that by-heart,

Thread Rated: 5/5 :14:

06-02-09, 08:28 PM #10

Rameshjeee
Good to be Back
Answers:
Join Date: Aug 2008
Location: Bangalore a) What is the full form of DLF?
Age: 27 Delhi Leasing and Finance
Posts: 3,010 b) What is full form of ITC? What was its full name before?
Rep Power: 11 Imperial Tobacco Company of India Limited
c) What is largest fall of the Sensex in % terms? When was it
recorded?
May 18, 2006: 826 points (6.76 per cent)
d) What is largest gain of the Sensex in % terms? When was it
 recorded?
May 18, 2009: 1,139.92 points (6.6 %)
e) Which company has the highest market capitalization in the
Sensex?
Reliance Industries
__________________
Collection of my useful Threads - All in One

Last edited by Rameshjeee; 06-02-09 at 08:28 PM. Reason:

Automerged Doublepost

06-02-09, 08:37 PM #11

just4kix
Guardian Angel
I honestly did not know the answers myself. I thought that
ONGC is the largest in terms of market cap. But I could be
wrong.

About ITC.

Rameshjee is correct. It is "Imperial Tobacco Company" but that

was before independence and some years later. After that it
bacame "Indian Tobacco Company" and then just ITC.
Join Date: Dec 2007
Location: Pune Last edited by just4kix; 06-02-09 at 08:37 PM. Reason:
Posts: 10,446 Automerged Doublepost
Blog Entries: 6
Rep Power: 25

06-03-09, 05:04 AM #12

The One
Guest

Posts: n/a Quote:

Originally Posted by Rameshjeee

Answers:

a) What is the full form of DLF?

 Delhi Leasing and Finance
b) What is full form of ITC? What was its full name before?
Imperial Tobacco Company of India Limited
c) What is largest fall of the Sensex in % terms? When was it
recorded?
May 18, 2006: 826 points (6.76 per cent)
d) What is largest gain of the Sensex in % terms? When was it
recorded?
May 18, 2009: 1,139.92 points (6.6 %)
e) Which company has the highest market capitalization in the
Sensex?
Reliance Industries
Quote:

Originally Posted by just4kix

Trivia:

a) What is the full form of DLF?

b) What is full form of ITC? What was its full name before?
c) What is largest fall of the Sensex in % terms? When was it
recorded?
d) What is largest gain of the Sensex in % terms? When was it
recorded?
e) Which company has the highest market capitalization in the
Sensex?

p/s. Do not cheat please.

:nono: :tt2:
:lol:

@j4x
Any that was a good way of ending a post, to attract more

replies to it. Maybe it would attract still more.

I still can't repo you.

Last edited by The One; 06-03-09 at 05:23 PM.

06-03-09, 05:19 PM #13

saurav_k
Guest
ya, Dhanesh, I also could have searched the answers. infact I
Posts: n/a
did. But, didnt post them here, as I didnt knew them. BTW, I
 knew the full forms of DLF & ITC. those were already posted by
Rameshjee

06-03-09, 07:48 PM #14

Dragon
Guest

Posts: n/a
Very good Post J4k!

Keep posting more about Stock market, those really helps me in

learning more.

Cant' Repo you know, as repoed you recently, but I owe you
one!

09-22-09, 10:36 AM #15

uncleji
Junior Member
It means BSE100, BSE 200.. all are based upon different
companies. Can anybody give me the link, from where i can find
out the historical data of CNX MIDCAP 200, because one mutual
fund based upon this index. It is not available in bseindia site.
CNXMIDCAP is available but not 200

Join Date: Jun 2009

Location: Ghaziabad
(barbaad BSNL)
Posts: 44
Rep Power: 2

10-03-09, 08:48 PM #16

Luke Skywalker
Jedi knight
 Quote:

Originally Posted by just4kix

I honestly did not know the answers myself. I thought that
ONGC is the largest in terms of market cap. But I could be
wrong.

Join Date: Jul 2009 About ITC.

Location: IBF
Age: 22 Rameshjee is correct. It is "Imperial Tobacco Company" but
Posts: 2,175 that was before independence and some years later. After that
Rep Power: 7 it bacame "Indian Tobacco Company" and then just ITC.
I also only knew that it refer to Indian tobacco Company. My
father told me that when I saw a candy ad of it. Candyman or
something can't recall.

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