We come to hear these words whether the Sensex is high or low. The market prices of shares have risen leading to happiness for the investors and vice-versa. Sensex has gone up by 500 or 1000 points.
But we don’t know what Sensex means. What are the reasons that it’s measured in points? What do we mean by Sensex and nifty? Numerous questions need to be answered to understand Sensex.
BSE whose full form is the Bombay Stock Exchange came into existence in the era 1875 and is located in Mumbai, India. It’s the first to be listed on the stock exchange.
It helps in the trading of equity, funds, derivatives etc. It has helped in the development of the capital market.
NSE came into actuality in 1992. It provides the loftiest day-to-day turnover for equity shares. It has improved translucency for investors. It has organized its products into different orders as follows- equities, derivations and fixed securities etc.
The term Sensex means sensitive and indicator. These are traded on the BSE. Let’s talk over some points on Sensex-
1) Liquidity-The share should be in liquid form. The work of Sensex is to reflect the increase and drop in shares prices listed on the Indian stock exchange.
2) Oldest-It’s one of the oldest indicators in India. The people of India consider it as the reflection of the market of the economy of India. It shows the real change of the market shares. It shows the growth, development and market trend of the industry.
3) Computation-BSE calculates Sensex with the help of the free-float system. Various other kinds of methods were used in the earlier times.1st Sept 2003; the new system is in use. The formula for calculating Sensex is-
Float market capitalization is calculated by the multiplication of the market capitalization with the free float factor. In this way, the calculation is done.
Free float means shares offered by the company and which are available to the general public for trading purposes. It means total outstanding shares the company has. The shares issued to the promoters or governments aren’t included in this.
Market capitalization is calculated by multiplying a Share price into the number of issued shares.
Sensex is essential in the present’s modernistic world for the computation of prices of the market shares and the jump up in the prices of the shares and securities and vice versa. Without Sensex, it’s delicate to determine the movement of our economy. 5paisa allows us to open our Demat account and helps us to do stock trading. We can check online whether the value of shares is boosting or dropping so we can trade according to our profit. One should check Sensex and keep an eye on it for knowing the various trends of it before dealing in any kind of shares or securities because pre-knowledge is important for making any kind of deal. The method to be followed for the calculation of share price should be correct in order to determine the correct price.
NSE came into reality in 1992. It gives the loftiest everyday turnover for value shares. It has further developed clarity for financial backers. It has coordinated its items into various orders as follows-values, deductions, and fixed protections, and so forth
Float market capitalization is determined by the increase of the market capitalization with the free float factor. Thus, the estimation is finished.
Free float implies shares presented by the organization and which are accessible to the overall population for exchanging purposes. It implies all our extraordinary offers the organization has. The offers given to the advertisers or states are excluded from this.