Understanding the multiple technicalities associated with the Sensex now is very much important for modern-day traders so that they will be able to have a good understanding of the stocks which are representing the financially sound companies in India. The term Sensex is a blend of two words which is the sensitive and the index and has been very well coined by stock market experts. This particular index very well helps in reflecting the movement of the Indian stock market and is considered to be the benchmark index of the entire market. It is the oldest index in the market in India and provides people with a good understanding of the time series from 1979 and the Bombay Stock exchange will be very well following this particular concept.
What are the technicalities that people need to know about the calculation of the Sensex?
Sensex now is also very much famous across the globe as BSE 30 because it was calculated based upon the market capitalisation whenever it was launched but shifted to the free float market capitalisation later on. This particular method is very well used by different kinds of index providers. Free float is the proportion of the total shares issued by the company that is readily available for training to the general public and ultimately it will not be taking into account the promoter’s holding, government holding or other shares in the whole process. Free float market capitalisation will be referring to the market capitalisation into the free float factor and for this particular point in time people need to have a good understanding of the market capitalisation which is the value of the company. It can be easily determined by multiplying the price of the share by the number of shared issues in the whole process.
How are the 30 companies selected in this case?
The criteria of the BSE for selecting these companies have been explained as follows:
- The company should be in the top under companies listed by the full market capitalisation
- The security of the company should have been traded on every trading day for the last one-year exceptions to this particular case can be considered due to extreme reasons and further having a good understanding of the trading frequency is important.
- The security should be in the top 150 firms listed by every number of trades per day and the average value of shares traded per day for the last one year
- In the opinion of the index committee, the firm should have an acceptable track record which is very well justified by the BSE on the official website. The index committee will be meeting quarterly to review the indices including the index and every review meeting will be leading to some changes in the constituents in the whole process.
Hence, having a good understanding of the top 30 companies which are actively trading in the BSE is important for people to have a good understanding of the Sensex now and further depending on experts from the house of 5paisa is very much important for people.
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