The Bombay Stock Exchange (BSE) is one of the oldest stock exchanges in Asia, established in 1875. It is located in Mumbai, India, and is the first exchange in India to receive permanent recognition from the government of India. The BSE index is the most widely followed index in India and is considered a barometer of the Indian stock market’s health. In this chapter, we will delve deeper into understanding the index of the Bombay Stock Exchange.
What is the BSE Index?
The BSE index, also known as the S&P BSE Sensex, is a market capitalization-weighted index consisting of the 30 largest and most actively traded companies listed on the BSE. It tracks the performance of the Indian stock market and is considered a benchmark for the Indian equity market.
The BSE index was first introduced in 1986 and had a base value of 100. It has since grown to become one of the most widely tracked indices in the world, with a history of over 30 years. It is updated in real-time during market hours, and its value reflects the overall performance of the Indian stock market.
How is the BSE Index Calculated?
The BSE index is calculated using the free-float market capitalization method. This means that only the shares of a company that are available for trading in the market are considered for calculating the index, and not the shares held by promoters, governments, or other strategic investors.
To calculate the index, the total market capitalization of the 30 companies included in the index is divided by a factor known as the index divisor. The index divisor is adjusted for corporate actions such as stock splits, bonus issues, and rights issues to ensure that the value of the index remains consistent over time.
What are the Companies Included in the BSE Index?
The BSE index consists of the 30 largest and most actively traded companies listed on the BSE. These companies are selected based on their market capitalization, liquidity, and trading activity. Some of the companies included in the BSE index are Reliance Industries, HDFC Bank, Infosys, Tata Consultancy Services, and ICICI Bank.
What is the Significance of the BSE Index?
The BSE index is widely followed by investors, traders, and analysts as a barometer of the Indian stock market’s health. It provides a snapshot of the overall performance of the Indian stock market and is used to assess the performance of mutual funds, exchange-traded funds (ETFs), and other investment vehicles.
The BSE index’s movements are closely watched by market participants as it can indicate the direction of the Indian stock market as a whole. If the index is rising, it is generally seen as a positive sign for the Indian economy, while a falling index may indicate a weaker economic outlook.
The BSE index is a market capitalization-weighted index consisting of the 30 largest and most actively traded companies listed on the BSE. It is considered a benchmark for the Indian equity market and is widely followed by investors and traders. The index’s movements can indicate the overall performance of the Indian stock market, and it is an important tool for assessing the performance of various investment vehicles.