What is Sensex

What is Sensex and how is it formed?

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What is Sensex and how is it formed: How Sesex Work today, Do you want to create your wealth by investing in the stock market? So that you can get financial freedom in future, so that the rest of your life will pass smoothly.

If yes, then you must read this article because in this we will tell you. What is Sensex and how it is formed and how it works.

Most of you must have heard or read the name of sensex at some point or the other. Whether it is on news channel or news paper or from the mouth of any friends, you must have heard or read this often.

That today the sensex went up so much in the Indian share market or fell so many points down. Whenever you will or will go to invest in the share market. So you should know about sensex, what is it after all?

Whenever you want to invest in share market, questions related to sensex must have come in your mind. So let us know what is sensex and how is it formed?

What is Sensex?

Friends, the word Sensex was first used by Deepak Mohani ji. Sensex word is made up of two different words first is sensitive and second is index.

Where sensitive means sensitive or hyperactive and index means index. That is, such a sensory index that keeps on changing very fast. That is, it can go up fast or it can also fall down fast.

Sensex is the BenchMark index of the Indian stock market, which is BSE i.e. Bombey Stock Exchange. Sensex tells every rise and fall in the price of shares listed on BSE.

Through this, we are able to get information about the performance of the shares of India’s 30 largest growing company listed in Sensex. Apart from this, Sensex is the oldest stock market index in India, which was started in 1986.

As you must have now understood that Sensex is a stock market index, in which the shares of the country’s largest and important company are listed.

The job of Sensex is just that, it keeps tracking the market value of the shares of those 30 companies. Which is listed in it, then when the stock market is closed in the evening, it gives us information related to the boom and recession in Sensex.

Then on the basis of which we can sell or buy our shares. As we mentioned above that sensex is registered in BSE i.e. Bombey Stock Exchange.

Where BSE (Bombay Stock Exchange) is the oldest stock exchange market in India. In this, a total of 30 big companies of India are listed. All these companies are the largest companies in India according to the market capitalize.

All these companies work in a way to set the trend of the Indian share market. Because the total contribution of these companies to our Indian GDP is 37% at present.

If sensex is understood in the easiest language, then just understand it. Key sensex is the one which is an index designed to measure the value of shares of India’s largest 30 companies.

Which keeps an eye on the slight ups and downs in the shares of all those companies. And provides its information to the investor, so that the investor can invest or withdraw his money on the basis of these indexes.

How is SENSEX formed?

Friends, so far we have known what is sensex and what does it do. But now the question is, how is sensex made and who are the people who make it, and on what basis they make sensex.

As we told all of you above that sensex is made up of 30 big comapnies listed in BSE (Bombey Stock Exchange). But the question is that there are more than 6000 companies listed in Bombey Stock Exchange.

Then why are other companies not counted in the sensex or why they are not included in it? So friends, let us tell you that even though there are more than 6000 companies listed in BSE.

But only those companies get a place in Sensex, which is one of the top and main companies in the market. This is also one of the reasons for including these biggest 30 companies in sensex.

The shares of these 30 largest companies are bought and sold the most. Along with this, these are all big companies, you can guess it from this point.

That their market capital is almost half of the shares of all the companies listed on BSE. Apart from this, there is also a reason that all these 30 big companies are selected from 13 differents sectors.

Apart from this, each of these companies is the largest company in its sectors. All these 30 companies are selected by the index committee of the stock exchange.

There are people of different categories in this Stock Exchange Index Committee. In which most of the members include government officers, banks and big economists of the country.

On what basis are 30 companies selected in Sensex?

Friends, now we know that what is Sensex? How is it made and how does it work? Now the question arises that what are the points on the basis of which index comety selects the shares of any companies in sensex.

So let’s know about the selection points on whose bases index comesty lists any company in the sensex. About which we are telling you below –

(1) For any company to be listed in Sensex, it is very important. That the company and its shares have been listed on the stock exchange for at least 1 year or more in the stock market. Only then that company will be eligible to be listed in Sensex.

(2) The second point is that the number of days the share market is open in the last one year. It is necessary to buy and sell the shares of that company on all those days.

(3) The third and last point that is seen is that, according to every day, the trade done by that company and its value must be one of the largest 150 companies in the country.

These are those three factors or points on the basis of which index comety may or may not give place to any company in sensex. Its rules and regulation are very strict so that companies can not commit any kind of fraud to list themselves in sensex.

Benefits of Investment in Sensex

The biggest advantage of Sensex is that, through this, every investor of the country can predict the changes in the stock market in future and create their wealth by investing their money at the right place at the right time.

Apart from this, some such benefits of sensex are also received by the people, which even if they do not get direct but they definitely get indirect. As we all know that the value of Indian currency keeps on changing all the time.

Now in such a situation, if there is a boom in the share market, then the value of Indian currency rupee also increases. That is, you can buy more and more goods in less money.

The same if the sensex falls down in the share market, then the value of the Indian currency rupee also falls. Because of which you are able to buy less and less goods for maximum rupees, which we generally call inflation.

Apart from this, there are some other benefits which we get due to sensex. for example –

(1) Whenever the sensex goes up, the investors are full of enthusiasm. There is a positive effect everywhere. Due to which investors start investing their money in companies listed in Sensex. When all this money goes to the companies, they expand their company. For this, people will be needed on a very large scale who can work for them. Due to which unemployment increases and people get better work and employment. Due to which unemployment will decrease in the country and the economy of the country will rise upwards.

(2) Along with this, when there is a boom in the stock market and the sensex keeps moving upwards. So many investors from other countries start investing in Indian companies. Due to which foreign currency starts coming into our country, and the rupee becomes stronger against the dollar. When this happens, the value of the rupee increases and the price decreases, so that you can buy more and more goods at a lower price. Apart from this, foreign products and services coming from outside also become cheaper.

Our country is a developing country, which is developing now, this means most of the time in our economy it will be like this. In which our economy will perform better than other countries. The only condition is that at such a time we have a sensible government, which can maintain all these things well.

Because if this is not done, it also has the opposite effect on a developing country which is the worst. That is economic slowdown, unemployment, increase in death rate, breakdown of law and order, increase in crimes. At such a time, we the public should use the power of our vote wisely.

Because a wrong vote of the people of the country can make such a government sit on our head. Which is of no use and keep our kiln sitting.

After the independence of the country, when the Indian stock market was first started in 1990. So at that time sensex used to be only 1000, but in today’s time sensex has crossed 30000 in the Indian share market.

It has gone up so much only because so far all the governments have come and gone in the country. He has always tried to raise the economy of the country.

Note: If you do not know anything about the behavior of share market. Then investing your money in the share market without thinking is dangerous for you. That is why it is very important that you invest in the share market only after thinking and understanding a lot. It would be better that first you get more and more information related to it, then invest.

Conclusion:

Hope friends, after reading this article of ours, you must have understood this. What is sensex? How does it work and when should we invest money in it.

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