The Meaning of Sensex

The Meaning of Sensex

Everyone has heard of the Sensex. Most of us know it is the Index of the Bombay Stock Exchange. But there are lots of facts you are probably unaware of. Here are six interesting facts about the Sensex.



1. The Sensex is an abbreviated version of The Bombay Stock Exchange Sensitive Index.
It is the benchmark index for the Indian stock market, closely followed by Nifty, which is the index of the National Stock Exchange. Officially called S&P CNX Nifty, this name is credited to the 50 stocks that comprise its index.


2. The Sensex is made up of only 30 stocks.
These stocks represent around a dozen sectors. They are leaders in their respective industries.


3. The stocks are picked by the stock selection committee (known as the Index Committee).
There are certain basic parameters fixed when picking these 30 stocks. They are:
3The stock should have been traded on each and every trading day (the days on which the stock market works) for the past one year.
3It should be among the top 150 companies listed by average number of trades (buying or selling of shares) and the average value of the trades (in actual rupee terms) per day over the past one year.

3The stock should have been listed on the BSE for at least one year.


4. The job of the Sensex is to capture the price movement of the equity market.
The Sensex reflects the price movements of shares. If the Sensex rises, it indicates the market is doing well.
The price of every stock price rises or falls for two possible reasons:
News about the company, Great earnings, great annual or quarterly results, product launch, closure of a factory, the government providing tax or duty exemptions to the sector so more profits expected, a feud among the company's top bosses, etc. This will be stock specific news.
News about the country Testing a nuclear bomb, a terrorist attack, the Budget announcement, new tax regime, declaration of war, change of government, good monsoons and hence a good agricultural crop, etc. This will be called index news.
The job of an index is mainly to capture the news about the country. This will reflect the movement of the stock market as a whole. It could also reflect the sentiment of the market as a whole. If corporate India is largely doing well, then it will get reflected here.
A good index will only capture news that is common to all stocks in India. This is what the Sensex does. In order to present a broad picture, the stocks selected are from different sectors.


5. The value of each of the stocks in the Sensex is not equal.
The market cap method Each of the 30 stocks in the Sensex has a weight attached to it. This weight depends on the market capitalization of the stock.
Market capitalization refers to the number of shares of a company multiplied by its market value (the price of each share).



For instance, if a company has 10 million shares whose value is Rs 30 per share on July 1, 2006, it will have a market cap of Rs 300 million on July 1, 2004.
Let's assume the market cap of the 30 Sensex stocks is Rs 3,00,000 crore. Let us also assume the market cap of ITC (which is one of the 30 shares that make up the Sensex) is Rs 20,000 crore, then ITC's weight in the Sensex is 6.66%.
The rise or fall in the price of ITC's shares will impact the Sensex to that extent.
This is referred to as the full market capitalization methodology.
Free-float weight age Here, a company's entire lot of shares are not taken into account (which means we are not looking at the entire market capitalization) . Only the shares readily available for trading are considered.
In every company, a certain amount of shares are not available for trading on the stock exchange. These shares could be held by the government or the promoters of the company. Under the free-float weightage method, they are not taken into account.
How does the stock exchange arrive at this weightage? In this case, the market cap is multiplied by the free float factor (which is the proportion of a company's shares that can be readily bought and sold).The Sensex uses the free-float weightage method.
The Sensex's free-float market cap at close of business on December 3, 2005, was Rs 3,66,124 crore.Unlike the Sensex, the 50 stocks in Nifty -- the index of the National Stock Exchange -- is based on the market cap method and not the free-float method.
You can read about the free-float method in detail on the BSE web site.


6. The clincher
Even though the BSE came into existence in 1875, the Sensex was formulated and came into existence only in 1986.

Principles of Life …

Principles of Life …

1: Life does not work through indecision. Indecision promotes blocks, confusion and stress. Make a decision and allow life to find movement through you. Trust yourself.

2: The 3 C's of life are Courage, Capacity and Commitment. It takes Courage and a Commitment to make many of life's decisions, and Capacity to follow them through.

3: Truth is never out of time....it always remains the truth. It is we who are usually unable...to recognise the truth.

4: The mind recoils from the unknown, so we seek to make everything known, and, thus safe. Imagination is the key to the unknown...the positive, uplifting imagination.

5: For as long as we search for Our God Self, we deny that we are it. Loving yourself reveals your truth.

6: Becoming free is not changing yourself into someone you think you should be. Becoming free is falling in love with who you are….....right now!

7: Imagine a room of pitch dark and a room of bright light connected by a door. When you open the door what happens? Light floods into the dark room……illuminating it. Live accordingly…open the doors of your heart…..and let the light in!

8: F.E.A.R……..False Evidence Appearing Real

9: Anything of the past that is unresolved is unresolved now. Living NOW resolves the past.

10: Life flows from the inside out, never the reverse. Once we understand this......we cease to be a victim.

11: Love responds…..fear reacts. Love connects…..fear separates. Love uplifts….fear deflates. Love creates…..fear destroys.

12: There is no such thing as a mistake…..only experience. There is no such thing as failure……only people's condemnation. There is no such thing as success…..only people's approval.

13: Do not get caught up in modifying your life.....allow life to change YOU. Modification is superficial exterior veneer; change is an inner shift in consciousness.
Let life live through you.

14: Pain is a measure of your resistance to change.

15: Decide whether you want to be an onlooker of life or a participant. This is the birthplace of choice.

16: You hear with your ears….. but you listen with your mind. You look with your eyes….but you see from the heart.

17: Consciousness is not contained in your body….. you’re the consciousness that contains the body. Consciousness draws to itself the form through which to express.

18: Your mind cannot exist in the moment. You cannot think your way into the moment, you can only think your way out of it. This indicates that your mind/intellect cannot set you free. True freedom is a state of consciousness. Only your consciousnesses aware of NOW.

19: We each live in our own universe, a universe of our making. It is designed to support our beliefs and our focus. Our thoughts are our focus, so observe your thoughts, focus on your blessings, and trust. This is how we each become a participant.

20: Practice seeing all life around you as an aspect of yourself. In this way you shatter the illusion of separation.

21: The 3 C's of a successful relationship are Caring, Consideration and Communication. Communication opens the door between us, Consideration allows us to pass through it and our ability to Care for each other unites us.

22: If you focus on what you do have, it increases. If you focus on what you don't have, you will have even less. If you focus on your capabilities, they grow, if you focus on your health, it improves.

23: Your mind does not know the difference between a powerfully imagined reality and a physical happening reality. Why....because there is no difference!

24: You only have a problem if you believe you have a problem.

25: Live these principles and you will be practicing reality. Practice reality until you overcome the illusion. It is only an illusion that you are not free, now!

- Author Anonymous