What is Sensex in simple terms ?

The S&P BSE SENSEX, also known simply as the SENSEX, is a stock market index that tracks the performance of 30 of the largest and most actively traded companies listed on the Bombay Stock Exchange (BSE) in India. It is considered a benchmark index for the Indian stock market and is used to gauge the overall performance of the market.

The index is calculated using a free-float market capitalization-weighted methodology, which means that the level of the index is based on the total market capitalization (the total value of all the outstanding shares) of the companies included in the index, with adjustments made for the number of shares that are available for public trading. The higher the market capitalization of a company, the greater its influence on the index.

The SENSEX is considered a barometer of the Indian economy, as the performance of the companies included in the index is closely tied to the overall economic performance of the country. A rising SENSEX is generally considered a sign of a growing economy, while a falling SENSEX is seen as an indication of a recession. It is a widely used index for measuring the stock market performance in India by fund managers, analysts and investors.

It’s important to mention that SENSEX and Nifty 50, another stock market index from National Stock Exchange of India (NSE) are two most well known benchmark indexes in India. Both are widely used by investors and traders to gauge the performance of Indian stock market.