What is Sensex in stock Market? How to trade in Sensex?

You Must have heard many times that sensex is 500 points up, or it’s down, but many people cannot understand what is sensex and How Sensex work? How it is related to share market and what the moment in sensex means so in this article we are going to tell you about the sensex index of stock market and how it is work how it is calculated and everything you need to know about but first of all,

What is sensex?

Sensex is the index of Bombay stock exchange, which tells the level of stock exchange. Sensex is basically a combination of two words which is sensitive index, it is formed in the year 1986 on January 1 by Bombay stock exchange. In the year 1986 sensex was started with the base value of 100. And it is a combined index of 30 top stocks of companies which are listed in Bombay stock exchange. Sensex is the oldest index in India, and it is one of the prominent stock exchange which shows the direction of the whole stock market.

Stocks in Sensex And their weightage

As we already told you that sensex is a combined index of 30, 30 well established stock which are listed in Bombay stock exchange.
The weightage of stocks is decided by BSE, and it can change the weightage of stocks in it according to their needs.
The list of current stocks in sensex and their weightage in 2022

Sl NoCompany
1.Reliance Industries Ltd.Integrated Oil & Gas12.00%
2.HDFC Bank Ltd.Banks10.47%
3.Infosys Ltd.IT Consulting & Software9.72%
4.Housing Development Finance Corporation Ltd.Housing Finance7.67%
5.ICICI Bank Ltd.Banks7.49%
6.Tata Consultancy Services Ltd.IT Consulting & Software5.99%
7.Kotak Mahindra Bank Ltd.Banks4.45%
8.Hindustan Unilever Ltd.Personal Products3.66%
9.Larsen & Toubro Ltd.Construction & Engineering3.19%
10.ITC Ltd.Cigarettes,Tobacco Products3.12%
11.Bajaj Finance Ltd.Finance (including NBFCs)3.09%
12.AXIS Bank Ltd.Banks3.07%
13Bharti Airtel Ltd.Telecom Services2.61%
14.State Bank of IndiaBanks2.53%
15.Asian Paints Ltd.Furniture,Furnishing,Paints2.32%
16.HCL Technologies Ltd.IT Consulting & Software2.20%
17.Bajaj FinservFinance (including NBFCs)1.67%
18.Tata Steel Ltd.Iron & Steel/Interm.Products1.51%
19.Tech Mahindra Ltd.IT Consulting & Software1.40%
20.Maruti Suzuki India Ltd.Cars & Utility Vehicles1.38%
21.Titan Company Ltd.Other Apparels & Accessories1.30%
22.UltraTech Cement Ltd.Cement & Cement Products1.30%
23.Sun Pharmaceutical Industries Ltd.Pharmaceuticals1.24%
24.Mahindra & Mahindra Ltd.Cars & Utility Vehicles1.11%
25.Nestle India Ltd.FMCG1.06%
26.IndusInd Bank LtdBanks1.05%
27.POWERGRIDElectric Utilities0.90%
28.NTPC Ltd.Electric Utilities0.88/%
29.Dr. ReddyPharmaceuticals0.87%
30.Bajaj Auto Ltd.2/3 Wheelers0.74%
Note-This data is as of March 2022

How the value of Sensex is calculated?

The value of sensex is calculated by the formula that is

Sensex=total free float Market capitalization/ base Market capitalization* base index value

And by free float Market capitalization meaning proportion of total number of shares issued by the 30 companies which are listed in BSE that is available for trading to the general public that exclude holding of shares by promoters and government.
Free float market capitalization is equal to market capitalization into free float factor.

Two, to calculate the value of sensex you have to determine following

  • Market capitalization of top 30 companies in the index sensex
  • Free float market capitalization of all the companies of sensex
  • Value of sensex is 25001.24 crore according to BSE

The formula now States sensex=free float Market capitalization of 30 firms or companies /250 41.24 crores* 100

How to trade in sensex?

As like other index like Nifty, Bank Nifty you cannot trade directly in options and future, you have to trade in stocks that are listed in BSE which concluded in Sensex.

How sensex is different from Nifty?

The basic difference between Nifty and sensex is that sensex is the index of Bombay stock exchange and Nifty is the index of National stock exchange.
The full form of sensex is sensitive index and the full form of nifty is national stock exchange 50

  • Sensex is the combined index of top 30 listed companies in the Bombay stock exchange and Nifty is the combined index of 50 companies that are listed in National stock exchange.
  • The base value of sensex was 100 when it is started and the base value of nifty 50 is 1000 when it is started.
  • Sensex is more volatile than Nifty.
  • Sensex is managed by Bombay stock exchange of India, while Nifty is managed by National stock exchange of India
  • Sensex is older than Nifty
  • You can not trade directly in sensex as options and features of Nifty.

Conclusion– I hope we clear all your doubt regarding what is sensex how it is calculated companies in sensex and their weightage in 2022 and what is the major differences between Nifty and sensex and if you have any doubt or any suggestions please let us know in the comment section below.

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