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FAQ's — FAQ-IDEA ON STOCK INDEX ON BSE AND NSE

FAQ's>>STOCK INDEX ON BSE AND NSE

1.    What is Sensex ?
Sensex is the abbreviated form of BSE Sensitive Index. It is the oldest stock index in India. Till the decade ofeighties,there was no scale to measure the various up sand downs in the Indian stock market. The stock Exchange, Mumbai (BSE) in1986 came out with a Stock Index (known as Sensex) that subsequently became the barometer of the Indian stock market. Sensex, first compiled in 1986is a “Market Capitalization-Weighted Index” of 30component stocks representing a sample of large, well established and financially sound companies. These stocks are taken from all significant sectors of the economy. The base year of Sensex is1978-79. Sensex is widely reported in both domestic and international markets through print as well as electronic media. In fact the Sensex is considered as pulse of the Indian stock market.

2.    Which companies are represented in the Sensex ?
Selected 30 (thirty) companies are represented in the Sensex. These30 companies are not always the same. The history of stock replacements in BSE Sensex shows that BSE makes some changes in the component stocks by exclusion and inclusion of stock(s)from time to time, depending on the actual need to do so.

3.    With what frequency is Sensex calculation done ?
During market hours, prices of index scrips, at which trades are executed, are automatically used by the trading computer to calculate the Sensex every minute and continuously updated on all trading work stations connected to the BSE trading computer in real time. The opening, high and low prices of Sensex of each working day are also given by the trading computer. But the closing prices of Sensex are calculated by using a specific formula

4.    Who maintains the Sensex?
Generally, stock index is maintained by the Exchange. In BSE, the day-to-day maintenance of Sensex and other indices is done byan Index committee of the Exchange. The present Index Committee of the BSE consists of various experts and such experts include representatives from members of the Exchange, FIIs (Foreign Institutional Investors), FIs (Financial Institutions), academicians, financial analysts and representatives of usergroups. NSE also has its own Index Committee for the purpose of maintaining day-to-day indices of various types.

5.    What is NIFTY? What are the underlying stocks of NIFTY?
Like Sensex on BSE, the stock index on NSE based on selected 50important stocks representing major sectors of the economy is called NIFTY. From time to time the NSE authority makes some changes in the components stocks of Nifty by inclusion and exclusion of stock(s), depending on the need to do so.