What Is the Sensex?
The S&P BSE Sensex, or Sensitive Index, is the benchmark index of the Bombay Stock Exchange in India. Sensex represents some of the largest and most actively traded stocks on the BSE. Established in 1875, the BSE (formerly known as Bombay Stock Exchange Ltd.) is Asia’s first stock exchange. The BSE is the world’s 10th largest stock exchange with an overall market capitalization of more than $2.3 trillion as of April 2018.
The Bombay Stock Exchange was founded by Premchand Roychand. He was one of the most influential businessmen in 19th-century Bombay. A man who made a fortune in the stockbroking business and came to be known as the Cotton King, the Bullion King or just the Big Bull. For more information on the Bombay Stock Exchange, visit here.
What Does the Index Cover?
The index covers multiple industry sectors and is a great indicator on the overall performance of the Indian stock market. The Sensex is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange.
The free float weighting method used by the index only takes into account shares readily available for trading. Excluding any restricted shares such as those held by company insiders.
The 30 component companies which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy.
History of S&P BSE Sensex
The Sensitive Index was created in 1986 and is the oldest benchmark of Indian stock market performance. Sensex, as with all large stock market indexes, is a great indicator of the overall economic growth. It is also a useful resource for those looking to analyse global equity market performance.
From 1986-2018 the index has risen from 540.43 points to 35,158.55, representing an impressive CAGR of 13.94%. This notable performance reflects India’s GDP or Gross Domestic Product growth rate, which is currently among the highest in the world. To learn more about the stock market, and the returns achievable, visit here.