Sensex

AAA

DEFINITION of 'Sensex'

An abbreviation of the Bombay Exchange Sensitive Index (Sensex) - the benchmark index of the Bombay Stock Exchange (BSE). It is composed of 30 of the largest and most actively-traded stocks on the BSE. Initially compiled in 1986, the Sensex is the oldest stock index in India.

INVESTOPEDIA EXPLAINS 'Sensex'

The index is calculated based on a free-float capitalization method when weighting the effect of a company on the index. This is a variation of the market cap method, but instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by company insiders that can't be readily sold.

To find the free-float capitalization of a company, first find its market cap (number of outstanding shares x share price) then multiply its free-float factor. The free-float factor is determined by the percentage of floated shares to outstanding. For example, if a company has a float of 10 million shares and outstanding shares of 12 million, the percent of float to outstanding is 83%. A company with an 83% free float falls in the 80-85% free-float factor, or 0.85, which is then multiplied by its market cap (e.g., $120 million (12 million shares x .$10/share) x 0.85 = $102 million free-float capitalization).

RELATED TERMS
  1. Float

    Money in the banking system that is briefly counted twice due ...
  2. Outstanding Shares

    A company's stock currently held by all its shareholders, including ...
  3. Index

    A statistical measure of change in an economy or a securities ...
  4. Dow Jones Industrial Average - ...

    The Dow Jones Industrial Average is a price-weighted average ...
  5. Weighted Average Market Capitalization

    A stock market index weighted by the market capitalization of ...
  6. Market Capitalization

    The total dollar market value of all of a company's outstanding ...
RELATED FAQS
  1. Why should an investor include an allocation to the telecommunications sector in ...

    An investor should include an allocation to the telecommunications sector in his portfolio, because telecom offers an investor ... Read Full Answer >>
  2. What portion of the telecommunications sector will benefit most from continued growth ...

    The portion of the telecommunications sector that is projected to benefit most from the continued growth in the use of cellphones ... Read Full Answer >>
  3. What is the difference between a greenfield investment and a regular investment?

    A greenfield investment is a particular type of investment where an international company begins a new operation in a foreign ... Read Full Answer >>
  4. How strong are the barriers to entry for new companies in the telecommunications ...

    The barriers to entry for new companies in the telecommunications sector are very strong and primarily revolve around the ... Read Full Answer >>
  5. What are the benefits for a company investing in a greenfield investment?

    Advantages of greenfield investments include increased control, the ability to form marketing partnerships and the avoidance ... Read Full Answer >>
  6. Why did China designated certain territories as special administrative regions?

    The primary reason for the People's Republic of China designating two territories as special administrative regions, or SARs, ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    An Introduction To The Indian Stock Market

    Emerging markets like India are fast becoming engines for future growth. Find out how to get in on the ground floor.
  2. Mutual Funds & ETFs

    Index Investing

    Get to know the most important market indices and the pros and cons of investing in them.
  3. Mutual Funds & ETFs

    ETF Analysis: Market Vectors Russia

    Learn about Market Vectors Russia ETF, its top holdings, as well as cyclical and political risks associated with investing in the Russian market.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Emerging Markets

    Learn more about the most liquid and highly traded emerging market ETF in the world -- the iShares MSCI Emerging Markets ETF (EEM).
  5. Professionals

    The Most Popular ETFs with Financial Advisors

    Financial advisors might continue to perform well by holding these popular ETFs, but time is limited.
  6. Stock Analysis

    Where Will the Shanghai Composite Be in a Year?

    The Shanghai Composite Index is on fire. But where will it be a year from now?
  7. Mutual Funds & ETFs

    Top 3 ETFs For Investing in Brazil

    Discover information and analysis of some of the most popular and best performing exchange-traded funds that offer investors exposure to Brazil.
  8. Economics

    Top 4 Ways to Invest in Chinese Bonds

    Investing in Chinese bonds isn't easy, but it is possible. Here's how.
  9. Personal Finance

    Why Best Buy Failed in China

    Best Buy entered China with much fanfare in 2006. The Minnesota-based retailer exited quietly last year. What went wrong?
  10. Economics

    Can Fracking Survive at $60 a Barrel?

    Can fracking survive at $60 a barrell?

You May Also Like

Hot Definitions
  1. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  2. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  3. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  4. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
  5. Touchline

    The highest price that a buyer of a particular security is willing to pay and the lowest price at which a seller is willing ...
  6. Himalayan Option

    An exotic equity option belonging to a class known as mountain range options. Himalayan options are based on a basket of ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!