Sensex

Business, Legal & Accounting Glossary

Definition: Sensex



Full Definition of Sensex


The Bombay Stock Exchange Sensitive Index or BSE Sensex is a “market capitalization-weighted” index of 30 stocks extracted from a large number of financially sound companies representing key sectors of the Indian economy. The base year for Sensex calculations was 1978-79. The base value of the Sensex is taken to be 100 on 1st April 1979. The two are represented by the notation 1978-79=100.

Free Float Market Capitalization Method

The ‘free-float market capitalization’ method of the Sensex enables the level of index at any point of time to reflect the free-float market value of any 30 selected stocks proportional to the base period. The Sensex is calculated on a free-float market capitalization methodology from 1st September 2003. The free-float market capitalization of 30 companies is divided by a number known as Index Divisor. The divisor is the only link to the Sensex original base period. It keeps the Sensex comparable over time. The Sensex is updated every 15 seconds during trading hours.

Objectives

The Sensex represents the benchmark index of the Indian capital markets. The Sensex fulfils the following objectives:

  • It is a benchmark for the performance of funds: The presence of Indian blue-chip companies in the Sensex makes it easier for fund managers to equate their funds’ performance vis-a-vis the index.
  • Helps in measuring market movements: The Sensex mirrors market trends. The index accurately captures the mood of the Indian stock markets.

Index Closure Algorithm

The closing Sensex on any trading day is calculated by taking the weighted average of all trades on Sensex components in the last 30 minutes of the trading session. If a Sensex component is not traded in the last 30 minutes, the last traded price is included in the calculations. If a Sensex component is not traded the whole day, the previous day’s closing price is entered into the index closure algorithm. Index closure algorithm bars any manipulation of the closing Sensex value.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/sensex/
Modern Language Association (MLA):
Sensex. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. October 26, 2020 https://payrollheaven.com/define/sensex/.
Chicago Manual of Style (CMS):
Sensex. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/sensex/ (accessed: October 26, 2020).
American Psychological Association (APA):
Sensex. PayrollHeaven.com. Retrieved October 26, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/sensex/

Definition Sources


Definitions for Sensex are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 29th March, 2020 | 9 Views.