How to calculate BSE SENSEX?
Requested by: Lt Col Ashis Kumar Mishra
This article explains how the value of the “BSE Sensex”
or “sensitive index” is calculated. If you are not sure
what we mean by the Sensex or what the Sensex is all about, you can
find this out by reading our “How to make money in the stock market?” article.
The Sensex has a very important function. The Sensex is supposed to be
an indicator of the stocks in the BSE. It is supposed to show whether
the stocks are generally going up, or generally going down.
To show this accurately, the Sensex is calculated taking into
consideration stock prices of 30 different BSE listed companies. It is calculated using the
“free-float market capitalization” method. This is a world
wide accepted method as one of the best methods for calculating a stock
market index.
Please note: The method used for calculating the Sensex and the 30
companies that are taken into consideration are changed from time to
time. This is done to make the Sensex an accurate index and so that it
represents the BSE stocks properly.
To really understand how the Sensex is calculated, you simply need to
understand what the term “free-float market capitalization”
means. (As we said earlier, the Sensex is calculated on basis of the
“free-float market capitalization” method) But, before we
understand what “free-float market capitalization” means,
you first need to understand what “market capitalization”
means.
Next - What is "market capitalization"? >>
| Other articles YOU
may like... How to start a company? How to make money in the stock market? How to manage your money? How to manage stress? How to buy a flat? |