Definition
SENSEX refers to the Sensitive Index of the Bombay Stock Exchange (BSE) in India. It’s a free-float market-weighted stock market index, featuring 30 of the largest and most actively traded stocks on the BSE. The SENSEX mainly reflects the overall conditions of the Indian stock market and the Indian economy.
Key Takeaways
- The full form of SENSEX is “Sensitivity Index”
- SENSEX is a stock market index for the Bombay Stock Exchange (BSE) in India.
- The index indicates the average performance of some of the largest companies listed on the BSE.
Importance
The full form of SENSEX, also known as the S&P BSE Sensex, is the Sensitive Index of the Bombay Stock Exchange. It’s of significant importance in finance because it’s an indicator of the Indian stock market’s overall financial health.
As one of the oldest and most commonly tracked indices in India, it reflects the performance of 30 financially sound and well-established companies across key sectors. These companies are listed on the Bombay Stock Exchange, which is one of the largest stock exchanges globally.
Therefore, the SENSEX offers investors and analysts a reliable barometer of India’s economic and market conditions. Any changes in the SENSEX can impact domestic and global financial decisions.
Explanation
SENSEX, short for Sensitive Index, is a stock market index, designed to measure the performance of the Bombay Stock Exchange (BSE), the oldest stock exchange in Asia. This index reflects the health of the Indian economy by mapping the robustness of the markets in India.
It represents the free float market capitalization of 30 financially sound, well-established, and economically significant companies listed on the exchange, spanning various sectors. As these companies are broadly representative of India’s diverse industries, the SENSEX is a good indicator of the overall market conditions.
The main purpose and use of the SENSEX is to provide investors, traders, and market watchers with a benchmark against which they can measure the returns on their investments. Furthermore, it helps them to understand and evaluate the overall behaviour and trends of the Indian stock market.
Consequently, many mutual funds use it as a benchmark for their performance. Evoquently, whether it be financial institutions, investors, or policy makers, SENSEX’s movements are closely observed and analyzed in order to make informed market predictions and decisions.
Examples of Full Form of SENSEX
SENSEX, or the Sensitive Index, is a term used in Indian finance, primarily associated with the Bombay Stock Exchange (BSE). Here are three real-world examples:
Stock Market: If you were an investor in India, you would likely monitor the SENSEX as it comprises of 30 of the most established and financially sound companies listed on the Bombay Stock Exchange (BSE). The performance of these companies give a good indication of the overall economic health in India.
Business News: On news channels or business news websites, you often come across the term ‘SENSEX’. They report on its movements to give viewers/readers an understanding of the financial market’s performance in India. For instance, if the SENSEX has risen, it’s often taken as a sign that the market is doing well.
Investment Decisions: If you were a financial advisor in India, you would study the trends in SENSEX to help guide your client’s investment decisions. If the SENSEX is continuing to rise, it might be a good time to advise clients to invest, as it indicates a bullish market. Conversely, a steadily falling SENSEX might prompt you to advise your clients to sell their investments or hold off investing until the market stabilizes.
FAQ for Full Form of SENSEX
1. What does SENSEX stand for?
The term SENSEX stands for Sensitive Index. It is coined by the Bombay Stock Exchange (BSE). The index is popularly known as BSE 30.
2. What is the importance of SENSEX?
SENSEX is a free-float market-weighted stock market index of the 30 well-established and financially sound companies listed on Bombay Stock Exchange. It is important as it is considered the barometer of the Indian stock market.
3. How is SENSEX calculated?
The SENSEX is calculated using a methodology that takes into account both the market capitalisation of the companies and the free float of the shares. The base year for the SENSEX is 1978-79 and the base value is 100.
4. What types of companies are included in the SENSEX?
SENSEX includes a sample of 30 financially sound companies. These companies belong to various industries like Finance, IT, Healthcare, Oil/Gas, Consumer Goods, and others.
5. Where can I check the daily SENSEX values?
You can check the daily SENSEX values on the official BSE website or on various financial news portals.
Related Entrepreneurship Terms
- BSE: Bombay Stock Exchange, the exchange on which SENSEX is calculated and disseminated.
- Equity Market: The marketplace where buyers and sellers trade in the equity securities, referring to the part of the financial market where SENSEX is calculated.
- Market Capitalization: The total market value of a company’s outstanding shares of stock, used in the computation of SENSEX.
- Index: A statistical measure of change in an economy or a securities market, like SENSEX in the Indian stock market.
- Market Performance: A measure of how the overall market or a specific share does over a specific period, expressed through indexes like SENSEX.
Sources for More Information
- Bloomberg Quint: This site offers news and analysis about stock markets, including SENSEX.
- Moneycontrol: An Indian finance portal that often covers topics related to SENSEX.
- Investopedia: A resourceful website that provides information on various finance and investment related terms including SENSEX.
- Bombay Stock Exchange: The official website of Bombay Stock Exchange where SENSEX, the benchmark index of BSE, is calculated and published.
