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What is Sensex?

Sensex, also known as the S&P BSE Sensex index, is the benchmark index of the Bombay Stock Exchange in India. Sensex includes 30 of the biggest and most actively-traded stocks on the BSE, giving an exact scale of India's economy.

The index's work is reviewed in June and December every year. Initially organized in 1986, the Sensex is the oldest stock index in India. Analysts and trader use the Sensex to see the overall growth, growth of particular industries, and booms and busts of the Indian economy.

Understanding Sensex

The word Sensex was invented by stock market analyst Deepak Mohoni and is a portmanteau of the terms Sensitive and Index. The constituents of the index are chosen by the S&P BSE index Committee based on five principles: it should be listed in India on BSE, it should be a large-to mega-cap stocks, it should be relatively liquid, it should create revenue from core activities, it should keep the sector supported broadly in line with the Indian equity market. The BSE Sensex's dropped by 12.7% - its worst fall - on April 18, 1992, after revelations of a scam in which a prominent broker siphoned money from the public banking sector to pump money into the stock.

The BSE Sensex experienced tremendous growth since India began up its economy in 1991. The growth has mainly occurred in the 21st century, growing from a close of 3,377.28 in 2002 to one of 20,286.99 in 2007 to a high of 38896.63 in August 2018. The growth has mainly occurred on the back of an increase in India's total national product growth since the turn of the century, which listed as one of the fastest in the world.

According to International Monetary Fund calculations, India's GDP increased fast between 2002 and 2007, and then stunted a bit in 2008, in stride with the global financial pressure of that year, but has been back on a stable growth rate since 2010. India’s growing GDP owes much credit to the growth of the Indian middle class, which were at less than 1 percent of the global middle class in 2000 but is expected to account for 10 percent by 2020. The middle class is a significant operator of customer demand.

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