The Sensex is considered the benchmark index of the Bombay Stock Exchange (BSE), and consists of the list of the top 30 companies listed on the BSE.
What is Sensex?
The BSE Sensex, or Sensex 30, as it is popularly known, is here to track the behaviour of the top 30 companies on the BSE as per the free-float market capitalization method.
The BSE Sensex stands for the S & P Bombay Stock Exchange Sensitive Index.
The top known facts about Sensex 30 are as below:
- The base year of the Sensex is 1978-1979 and its base value is 100. Currently, the Sensex is hovering at 50,000 points.
- The 30 companies included in the Sensex 30 list are selected on the basis of their free-float market capitalization.
- These 30 companies are altogether different companies from different sectors that represent liquid, large, and representative companies.
The Sensex is generally an indicator of market movement.
The relationship between the movement of the Sensex and the stock market is very close.
If the Sensex goes up, the price of the major stocks on the BSE will go up; if the Sensex goes down, the price of the major stocks on the BSE will go down.
Constituents of Sensex 30 companies list with the weightage
The entire list of the Sensex 30 companies is attached herewith:
|Sr. No.||Name of the Company||Industry||Weight|
|1||Reliance Industries Limited||Oil and Gas||12.00%|
|2||HDFC Banks Limited||Banking||10.47%|
|4||Housing Development Finance Corporation Limited||Housing Finance||7.67%|
|5||ICICI Bank Limited||Banking||7.49%|
|6||Tata Consultancy Services Limited||IT||5.99%|
|7||Kotak Mahindra Bank Limited||Banking||4.45%|
|8||Hindustan Unilever Limited||Personal Products||3.66%|
|9||Larsen & Toubro Limited||Construction and Engineering||3.19%|
|10||ITC Limited||Cigarettes and Tobacco||3.12%|
|11||Bajaj Finance Limited||Finance||3.09%|
|12||Axis Bank Limited||Banking||3.07%|
|13||Bharti Airtel Limited||Telecom||2.61%|
|15||Asian Paints Limited||Paints||2.32%|
|16||HCL Technologies Limited||IT||2.20%|
|18||Tata Steel Limited||Iron and Steel||1.51%|
|19||Tech Mahindra Limited||IT||1.40%|
|20||Maruti Suzuki India Limited||Cars and Utility Vehicles||1.38%|
|21||Titan Company Limited||Watches and Accessories||1.30%|
|22||Ultra Tech Cement Limited||Cement and related products||1.30%|
|23||Sun Pharmaceuticals Industries Limited||Pharmaceuticals||1.24%|
|24||Mahindra & Mahindra Limited||Cars and Utility Vehicles||1.11%|
|25||Nestle India Limited||FMCG||1.06%|
|26||IndusInd Bank Limited||Banking||1.05%|
|27||Power Grid||Electric Utilities||0.90%|
|28||NTPC Limited||Electric Utilities||0.88%|
|30||Bajaj Auto Limited||2/3 wheelers||0.74%|
Notable facts about the Sensex 30 companies:
When the Sensex 30 companies are grouped together, it becomes a bellwether index.
Tracking this index truly gives an exclusive idea of the market trend.
Some of the notable facts about the Sensex 30 companies are as below:
What is S&P BSE Sensex?
It is also known as the “bellwether index” of the Indian economy.
There are a total of 30 company stocks included in this index.
These 30 companies are the largest as well as most liquid companies in their own performing sectors.
The entire size and the trading volumes of these stocks are very true representatives of their own sector/industry.
The S&P BSE Sensex has the base year of 1978-1979 and was launched on January 1, 1986.
Which sector/industry is represented in the Sensex?
Presently, Sensex has 18 sectors.
The list of sectors covered with their weightage is listed below:
|1||Oil and Gas|
|9||Car and Utility Vehicles|
|10||Cement and related products|
|11||Iron and steel|
|15||Watches and accessories|
|16||Construction and Engineering|
|17||Cigarettes and Tobacco|
As mentioned earlier in this blog, the banking sector has a very huge dominance in the market, followed by IT, Oil & Gas, etc.
Which companies are selected for the Sensex?
There is no partiality in the selection of the stocks of the Sensex companies.
All the BSE companies are included in the Sensex.
The stock exchange tends to follow the screening criteria for shortlisting the stocks for Sensex.
The companies that are listed on the BSE are classified into 4 categories:
- A group
- B group
- T group, and
- Z group
The following are the preconditions for selecting the company:
- Z group companies are excluded.
- IPOs are not included in the Sensex because to be eligible for the Sensex, companies should be listed on BSE for at least 3 months.
- It should be mandatory that the company’s stock be traded daily for the past 3 months.
- The company should have mandatorily reported the sales turnover of the last 4 quarters.
Apart from the mere selection, the stocks are also screened.
The company is allowed to go through this entire screening process:
- Screening 1- Free Float:
The companies are listed in order of their average three-month float market capitalization. Only the top 75 companies from this list are considered for further screening.
- Screening 2- Full Market Capitalization:
All companies are ranked based on their 3-month average of their full market capitalization. Here the top 75 companies are also selected.
The companies that are shortlisted in 1 and 2 above form one list.
- Screening 3- Trading Volume:
The combined companies are once again screened based on their average trading volume over the past 3 months. All those companies whose cumulative value traded is less than 98% will be excluded from this list.
- Screening 4- Weight:
The balance companies are once again ranked based on float-market capitalization. Companies with a calculated weight of less than 0.5% are again excluded.
The remaining balance is in itself a list of the Sensex 30 companies.
What are Free Float and Full Market Capitalization?
The free-float market cap will represent those shares of the company which is available for trading. Of the total stocks issued by the company, only a few are actively traded in the market. All these active stocks will build free-floating market capitalization.
A full market cap will represent all the shares issued by the company.
Free float market cap =/< full market cap.
How is the weight of the stocks calculated in the Sensex?
First, we will list all the 30 stocks in the Sensex.
Then, we will note the free-float market cap against each stock.
After that, we will add the market app for all 30 stocks.
Here, the higher the market cap, the higher the weightage in the Sensex.
All the free-float market cap and a market cap of the Sensex 30 companies can be viewed here.
What does it mean when we say that the Sensex is at 55,000 points?
The base year of S&P BSE is 1978-1979 with a base value of 100.
The launch date of the Sensex was January 01, 1986, and on that same day, the value was 561 points.
So when we say that the Sensex is at 55,000 points in the year 2022, this number is compared with the years 1978-1979.
So here we can see that the Sensex jumped from 100 to 55,000 points, i.e., total growth of 15.8% p.a. in 43 years.
Why should we know Sensex’s stock weightage?
Our main target while trading is to locate a stock that is fundamentally strong as well as undervalued.
The identification of such fundamentally strong stocks can be done through fundamental analysis and price valuation.
Trading in these stocks is always a good way to start the process of stock investing.
Some excerpts about the stock exchange:
The stock market is an exchange for buying and selling all publicly-traded company shares.
Only a licensed middleman, known as a stockbroker, can facilitate stock market trading on the exchange.
However, shares can be purchased as well as sold via an electronic trading platform.
The list of the Sensex 30 companies will help us understand the current state of the Indian stock markets. It will also help us to understand all the stocks as well as other equity investments.
Frequently Asked Questions (FAQs)
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