{"id":29030,"date":"2022-07-29T06:58:08","date_gmt":"2022-07-29T06:58:08","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=29030"},"modified":"2022-07-29T06:58:12","modified_gmt":"2022-07-29T06:58:12","slug":"what-is-sensex-and-how-is-it-calculated","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/moneyfy\/investment-guide\/what-is-sensex-and-how-is-it-calculated\/","title":{"rendered":"What Is Sensex And How Is Sensex Calculated?"},"content":{"rendered":"\n

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How do you know if a particular company\u2019s stock is performing well? Simple – you use a performance benchmark maintained and monitored by professionals for comparison. And in India, Sensex is a market index offering one such yardstick to both beginners and seasoned investors.<\/p>\n\n\n\n

But before we get to it, let us first understand what a stock market index is.<\/p>\n\n\n\n

A stock market index is a statistical measurement of the ups and downs of a group of stocks or assets. It essentially measures the changes in the group\u2019s stock prices over a specific period.<\/p>\n\n\n\n

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Now, what is Sensex?<\/strong><\/h2>\n\n\n\n

Think of Sensex as a numerical progress report for 30 of the most actively traded and financially stable company stocks listed on the BSE Limited.<\/p>\n\n\n\n

Each of the 30 stocks belongs to a highly influential company and represents India’s major industry\/sector. The BSE Sensex value increases or decreases as and when the stock prices of these 30 companies fluctuate with changing economic cycles.  <\/p>\n\n\n\n

To simplify further, the index reflects the overriding sentiment of the market participants (investors\/traders), the market’s equity health, and the broad state of the Indian economy. If the participants believe the economy will do well in the coming term, they will trade more actively and increase the index. <\/p>\n\n\n\n

Should the participants feel the opposite happening (economic slowdown), they will likely pull out of the market or stop investing\/trading actively. This can cause BSE Sensex to plummet by a few points. <\/p>\n\n\n\n

Just consider the current market scenario. For a while now, investors have been speculating a bumpy ride for the Indian economy, given the rise of global inflation. This is indicated in the BSE Sensex’s volatile performance at the beginning of June. <\/p>\n\n\n\n

On 6th June 2022, Sensex was at 55,675.32 when the market closed \u2013 down by 93.91 points or 0.17%. And only seven days before, the index had touched 55,785.70 after gaining 1,079.02 points on 30th May 2022 due to a rally of technology stocks. <\/p>\n\n\n\n

So you see, this is how the economic events recast the Sensex index. Its value directly reflects the true composition of the market at a given time. That’s why knowing what Sensex\u2019s performance over a specific period is can tell you a lot about the country’s economic health and where to invest your money.<\/p>\n\n\n\n

Now, a few questions remain. <\/p>\n\n\n\n