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What is Sensex? How is Sensex calculated?

Sensex and Nifty are two large-cap indexes linked with two type stock exchanges of the country namely Bombay Stock Exchange and National Stock Exchange. These are just a statistical sum on how a move in the stock market can be covered.


What is Sensex?

Sensitive Index or Sensex is the stock market index sign for the BSE. It is also seldom pointed to as BSE Sensex. It was first issued in 1986 and is based on the market considered stock index of 30 companies based on financial performance. The large, organized companies that describe many industrial sectors are a part of this.


How is Sensex calculated?

The calculation of Sensex is made by a Free-Float method that came into being from September 1, 2003. The level of Sensex is a primary sign of the production of 30 stocks in the market. The free-float method demands into account the balance of the shares that can be easily traded in the market. This does not combine the ones owned by various shareholders and promoters or other locked-in shares not ready in the market.


The method of calculation of Sensex

First, market capitalization is used into account. This is performed by adding all the shares allotted by the company with the cost of its stock. Then BSE manages a Free-float factor that is a multiple of the market capitalization of the company. This assists in managing the free-float market capitalization based on the items submitted by the company. Then, Ratio and Proportion are applied based on the support index of 100. This supports to define the Sensex.


The Main Difference Between Sensex and Nifty

Both Sensex and nifty are share market index applied to calculate the price and strength of the share market. Since nifty is more diversified and has more stock listed as compared to the BSE market, mostly trading done on it. And the truth of both target the large-cap stocks and performance across the year have set out to be alike. You can trade on nifty but not on Sensex because it index and nifty has a derivative. And benefit on trading in nifty is you can easily get free stock tips and also paid stock tips.

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