SENSEX: SENSEX is the 'Sensitive Index'. As we know Stock Market is listed with different sectors of shares like pharma,automobiles,Information technology,etc.SENSEX is one of the oldest Stock Index of BSE(Bombay Stock Exchange India) which comprises of 30 Stocks of various sectors.These 30 Stocks are the largest and most actively traded Stocks on the BSE.
The Sensex having an important function. The Sensex is supposed to be an indicator of the stocks in the BSE i.e Bombay Stock Market (India). It is supposed to show whether the stock value are generally going to raise or fall.
Now let us have a look on how Sensex is calculated...
Sensex is calculated by a method called "FREE FLOAT MARKET CAPITALIZATION". It is the world wide accepted and best method to calculate the market Index. Before going to know about this method ,it is important to understand the Market Capitalization.
In simple words Market Capitalization is the worth of the company by its shares, i.e if you want to buy all the shares of the company the amount you spent is nothing but the Market Capitalization of the particular Company.For example,if a company name as 'PineApple' issued 10 shares in market, and the market price of the each share would be Rs.10 then the Market Capitalization of the Pine Apple is simply 100Rs.
Depending on the value of the market cap, the company will either be a “mid-cap” or “large-cap” or “small-cap” company....Infosys company having market capitalization of 154,739.12 cr Rs. when this article was written.
we came to know about the market capital, then lets have a look on "free-float shares". Any Particular Company have some shares for the open market and some for non trading.For example some shares held with directors of the company such shares are non trading shares.Shares which are for open market such shares are called ''free-float shares''.
So, "free-float market capt" is nothing but the total cost of buying all the free floating shares of particular company.Now let us see how the sensex is calculated at a particular instant of trading time.
STEP1:First finding out the "Free-float market capitalization" of the all 30 Companies which are listed in Sensex Index.
STEP2:Adding all the "free-float market cap" of all 30.
STEP3:Making all this relative to the Sensex base. The value we get is the Sensex value... that's it...
Probably we don't understand the last step i know.... Let us understand it
Suppose free-float market cap. of 500cr. the sensex value is 20points the day before then if the free-float market cap. is 800cr. now then
500/20 = 800/x ==> x =800/25 = 32points
Even a school child can perform this operation ...right.... So, for 800cr of market cap. the sensex is 32points(Its just an example).If the market value of Shares increases or decreases then automatically market capital varies ,finally sensex too varies....If Share value goes high then automatically Sensex goes high.
Almost all the share markets are following this type of method in calculating their Index points.....
we will be discussing about "Buy back of Shares" in upcoming posts...
The Sensex having an important function. The Sensex is supposed to be an indicator of the stocks in the BSE i.e Bombay Stock Market (India). It is supposed to show whether the stock value are generally going to raise or fall.
Now let us have a look on how Sensex is calculated...
Sensex is calculated by a method called "FREE FLOAT MARKET CAPITALIZATION". It is the world wide accepted and best method to calculate the market Index. Before going to know about this method ,it is important to understand the Market Capitalization.
In simple words Market Capitalization is the worth of the company by its shares, i.e if you want to buy all the shares of the company the amount you spent is nothing but the Market Capitalization of the particular Company.For example,if a company name as 'PineApple' issued 10 shares in market, and the market price of the each share would be Rs.10 then the Market Capitalization of the Pine Apple is simply 100Rs.
Depending on the value of the market cap, the company will either be a “mid-cap” or “large-cap” or “small-cap” company....Infosys company having market capitalization of 154,739.12 cr Rs. when this article was written.
we came to know about the market capital, then lets have a look on "free-float shares". Any Particular Company have some shares for the open market and some for non trading.For example some shares held with directors of the company such shares are non trading shares.Shares which are for open market such shares are called ''free-float shares''.
So, "free-float market capt" is nothing but the total cost of buying all the free floating shares of particular company.Now let us see how the sensex is calculated at a particular instant of trading time.
STEP1:First finding out the "Free-float market capitalization" of the all 30 Companies which are listed in Sensex Index.
STEP2:Adding all the "free-float market cap" of all 30.
STEP3:Making all this relative to the Sensex base. The value we get is the Sensex value... that's it...
Probably we don't understand the last step i know.... Let us understand it
Suppose free-float market cap. of 500cr. the sensex value is 20points the day before then if the free-float market cap. is 800cr. now then
500/20 = 800/x ==> x =800/25 = 32points
Even a school child can perform this operation ...right.... So, for 800cr of market cap. the sensex is 32points(Its just an example).If the market value of Shares increases or decreases then automatically market capital varies ,finally sensex too varies....If Share value goes high then automatically Sensex goes high.
Almost all the share markets are following this type of method in calculating their Index points.....
we will be discussing about "Buy back of Shares" in upcoming posts...
15 comments:
Very impressive post on Best Stocks Advisory Company In India. Very impressive post. I feel this post helps the readers to enhance their knowledge in stock market. Keep it up.
sensex is calculated by method.sensex is very important funtion.it is sensitive index.and all the news are about sensex is beneficial.
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Sensex is a prominent index introduced by Bombay Stock Exchange on Jan 1, 1986. It is an indicator of all companies on BSE.
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The S&P BSE Sensex surged over 310 points to close at a fresh record high of 35,082 for the first time ever as the Government has lowered its additional borrowing plan to Rs. 20,000 crore for the fiscal from the earlier proposal of raising an extra Rs. 50,000 crore from the market. For more market updates visit CapitalHeight
Sensex stands for sensitive index(BSE). Sensex indicates all major companies of BSE.
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