Unlocking the Growth Trajectory: A Comprehensive Guide to Sensex

The Sensex, formally recognized as the S&P BSE Sensex, serves as a pivotal gauge of the Indian stock market, capturing economic trends through its assembly of 30 key companies on the Bombay Stock Exchange (BSE). Formed in 1986 by Deepak Mohoni, the term "Sensex" merges 'Sensitive' and 'Index,' highlighting its market sensitivity.

Evolution and Criteria:

Selection Criteria:

The Sensex is constituted of entities vetted by the S&P BSE Index Committee. Companies must be listed on the BSE, hold large/mega-cap status, exhibit liquidity, generate earnings from core activities, and contribute to sector equilibrium.

Growth Phases:

During the early 1990s, the Sensex experienced considerable expansion, with a milestone in 2002 when it exceeded the 6000-point mark, driven by the emerging information technology sector.

Calculation Methodology:

Transition in Methodology:

The Sensex's calculation methodology shifted from a market capitalization-based weighted system to a free-float capitalization model in 2003, improving precision by considering shares available for trade. This is calculated by multiplying Market Capitalization by the Free Float Factor.

Investing in Sensex:

Procedural Steps:

Investors must navigate a series of steps to invest in Sensex. Opening a Demat account for digital shareholding, along with a trading account for online transactions, is essential. A bank account and PAN card are required for effective Sensex trading.

Milestones and Historical Landmarks:

Growth Trajectory:

The Sensex has marked several milestones throughout its history. It ascended beyond 1000 points in 1990, and 5000 points in 1999. In the 21st century, it reached unprecedented highs, crossing 10,000 in 2006, 20,000 in 2007, and 40,000 in 2019.

Economic Downturns:

Despite upward trends, the Sensex has endured significant downturns, such as the 2008-2009 crisis and incidents like the Harshad Mehta scam in 1992 and Satyam fraud in 2009, leading to notable declines.

Resilience and Global Attraction:

Steady Growth Amidst Fluctuations:

Through the years, Sensex has consistently shown resilience and growth despite periodic uncertainties and market volatilities.

Global Investor Magnet:

As a vital indicator of the Indian economy, Sensex continues to draw global investors, providing insights into the nation's economic vigour and investment prospects.

In summary, the Sensex epitomizes the dynamic nature of the Indian stock market. Its progression, precise calculation method, and resilience highlight its importance as a measure of economic health, assisting investors in navigating complex market dynamics. As the Sensex narrative unfolds, it acts as a guiding light for both seasoned and new investors.

*[RTGS]: Real-Time Gross Settlement

*[IMPS]: Immediate Payment Service

*[NEFT]: National Electronic Funds Transfer

*[REITs]: Real Estate Investment Trusts