The amalgamation of the words sensitive and index brought Sensex into existence. Sensex analyses the performance of the Indian economy by tracking the Bombay stock exchange’s 30 most traded stocks. Sensex today refers to the current value of each stock under the 30 different companies.
Sensex is analysed annually in June and December to check its performance. It takes into account both the float capital and market capital to arrive at an accurate representation.
Sensex is India’s oldest stock index. It was established in 1986 and is managed by S&P. Many analysts and financiers consult it to track the ups and downs of the Indian economy and the rise and fall of specific sectors.
The working of the Sensex-
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The S&P BSE Sensex, also known as the Sensex or Sensex Index, is a stock market index that contains 30 of India’s biggest and most active public companies. A sizable quantity of investors from all over the world regards the Sensex as a barometer of the general state of the Indian economy, which has grown dramatically over the last several decades.
The Sensex is another name for this indicator. Most of the companies in the Sensex are listed on the Bombay Stock Exchange, which is not only the largest stock exchange in India but also one of the biggest stock exchanges in the world.
What is Intraday trading-
Intraday trading refers to the process of buying and selling stocks within the course of a single trading day. Trading during the day is sometimes referred to as intraday trading. Intraday traders attempt to profit from the continually shifting prices of shares by buying and selling them within the same day to take advantage of the price fluctuations that occur throughout the trading day.
The calculation of Sensex-
The BSE will occasionally make changes to the Sensex’s components to ensure that the index’s composition accurately reflects the situation of the stock market. Initially, the index was determined using a methodology that assigned more significant weight to larger companies. Despite this, in 2003, a free-float capitalization methodology was integrated into this method of calculation. We’ve been utilizing it regularly ever since.
Instead of using the overall value of the stock held by a company, as is done with the traditional technique, the free-float method uses the number of shares that are freely and publicly traded on the market to determine an index. Therefore, this plan does not consider restricted shares, which are stocks that are only available for ownership by insiders and cannot be purchased.
Taking the market capitalization of a company (the number of outstanding shares times the stock price) and dividing it by the free-float factor yields free-float capitalization. This figure indicates the proportion of issued shares relative to the total outstanding shares.
If the index level is to appropriately reflect the free-float worth of the 30 companies that make up the Sensex relative to a base period, it must be calculated using the free-float capitalization technique.
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