What Is Sensex In The Stock Market – Explained

What Is Sensex In The Stock Market - Explained

Sensex or Sensitive Index is an index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange. The Sensex and the NIFTY50 are the two major indices in India that can be used to gauge the financial situation in India. They help in assessing how the performance of the Indian Stock Market is as a whole. Like other major financial indices in the world, the index is calculated based on a free-float capitalization method. It’s a benchmark index of the Bombay Stock Exchange. 

It comprises 30 companies that are the leaders in their field. These companies are Asian Paints, Bajaj Finance, ITC Limited, Larsen & Toubro, Mahindra & Mahindra, Oil and Natural Gas Corporation, UltraTech Cement, Power Grid Corporation of India, Sun Pharma, Titan Company, etc. 

The Sensex began in 1986, it is the oldest index in India. Since then its value has reached an all-time high of 59616 rupees on the 17th Sept 2021, As it’s an index for multiple companies, it’s very volatile as small drops in a couple of companies lead to huge losses for Sensex. When the Sensex is rising it means that all the companies involved are doing well and the Indian economy as a whole is doing better than before. 

The Sensex can be used to gauge the sentiment of all the investors. If the Sensex is climbing to new highs regularly, then the investors believe in the companies that are a part of the Sensex and the companies are also doing well financially. If the Sensex is regressing for any reason, it’s wise to understand that the companies aren’t doing well and investors too, are skeptical when it comes to investing.  

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The Sensex can be used as a reference before you choose to buy stocks in the Stock Market. Depending on the performance of Sensex, you can assess if the shares of the companies involved should be purchased or not. Accessing Sensex and understanding why it’s increasing or decreasing can help you to make the decision to buy or sell a share of a specific company. 

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If a certain company is a reason for the said increase, you can purchase the shares of that company ensuring that you don’t miss out on this opportunity. If the Sensex is regressing and you are in a company that is also regressing you can book your profits on that share and sell your position ensuring you don’t face more losses.   

To purchase these shares, it’s a wise idea to open a Demat account with IIFL Securities. They provide various features which you can utilize to have a better trading experience. They even provide detailed information regarding the Sensex, including a brief history about it. IIFL Securities provides a list of the companies that are involved in the Sensex. 

In conclusion, Sensex is a valuable index showcasing the performance of the biggest companies in the Indian Stock Market. It also provides a gauge of how the Indian Stock Market is performing as a whole. It’s a valuable index and can provide a lot of information if you understand it.

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About Shaista

Hi, I am Shaista. I enjoy drawing paintings and watching movies in my free time. I also love to travel and explore new places and learn new things. I am fond of writing and reading.

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