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The Sensex (Sensitive Index), India’s benchmark index, was first compiled in 1986.
The base period of Sensex is 1978-79 and the base value is 100 index points. This
is often indicated by the notation 1978-79=100.
The Sensex (Sensitive Index), India’s benchmark index, was first compiled in 1986.
The base period of Sensex is 1978-79 and the base value is 100 index points. This
is often indicated by the notation 1978-79=100.
The calculation of Sensex involves dividing the free-float market capitalization
of 30 companies in the Index by a number called the Index Divisor. The Divisor is
the only link to the original base period value of the Sensex. It keeps the Index
comparable over time and is the adjustment point for all Index adjustments arising
out of corporate actions, replacement of scrips etc. During market hours, prices
of the index scrips, at which latest trades are executed, are used by the trading
system to calculate Sensex on a continuous basis using the free-float methodology.
Free-float Methodology refers to an index construction methodology that takes into
consideration only the free-float market capitalization of a company for the purpose
of index calculation and assigning weight to stocks in the Index. Free-float market
capitalization is defined as that proportion of total shares issued by the company
that are readily available for trading in the market. A Free-float index reflects
the market trends more rationally as it takes into consideration only those shares
that are available for trading in the market.
The BSE Index Cell does a real-time maintenance of the Sensex. The BSE Index Cell
comprises of a committee of capital market expert, fund managers, market participants
and members of the BSE Governing Board.
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