From Wikipedia, the free encyclopedia BSE SENSEX
BSE SENSEX
free float capitalization method—a variation of the mar-
ket capitalisation method. 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 promoters, government and strategic in-
vestors.[1]
Initially, the index was calculated based on the ‘full
market capitalization’ method. However this was shifted
to the free float method with effect from September 1,
2003. Globally, the free float market capitalization is re-
garded as the industry best practice.
As per free float capitalization methodology, the level
of index at any point of time reflects the free float market
value of 30 component stocks relative to a base period.
The market capitalization of a company is determined by
multiplying the price of its stock by the number of shares
issued by the company. This market capitalization is mul-
tiplied by a free float factor to determine the free float
market capitalization. Free float factor is also referred
as adjustment factor. Free float factor represent the per-
centage of shares that are readily available for trading.
The calculation of SENSEX involves dividing the free
float market capitalization of 30 companies in the index
The Bombay Stock Exchange building located on Dalal Street, by a number called index divisor.The divisor is the only
Mumbai link to original base period value of the SENSEX. It keeps
the index comparable over time and is the adjustment
The Bombay Stock Exchange SENSEX (portmanteau point for all index adjustments arising out of corporate
of sensitive and index) also referred to as BSE 30 is a free- actions, replacement of scrips, etc.
float market capitalization-weighted stock market index The index has increased by over ten times from June
of 30 well-established and financially sound companies 1990 to the present. Using information from April 1979
listed on Bombay Stock Exchange. The 30 component onwards, the long-run rate of return on the BSE SENSEX
companies which are some of the largest and most ac- works out to be 18.6% per annum, which translates to
tively traded stocks, are representative of various indus- roughly 9% per annum after compensating for infla-
trial sectors of the Indian economy. Published since Jan- tion.[2]
uary 1, 1986, the SENSEX is regarded as the pulse of the
domestic stock markets in India. The base value of the
SENSEX is taken as 100 on April 1, 1979, and its base
Constituents
year as 1978-79. On 25 July, 2001 BSE launched DOLLEX-30
DOLLEX-30, Main article: List of BSE SENSEX companies
a dollar-linked version of SENSEX. As of 21 April 2011, Following is the list of the component companies of
the market capitalisation of SENSEX was about 29,733 SENSEX as on August 8, 2011
billion (US$565 billion) (42.34% of market capitalization Some of the historical replacements were:
of BSE), while its free-float market capitalization was • DLF replaced Dr. Reddy’s Lab on November 19, 2007.
15,690 billion (US$298 billion). • Jaiprakash Associates Ltd replaced Bajaj Auto Ltd on
March 14, 2008.
• Sterlite Industries replaced Ambuja Cements on July
Calculation 28, 2008.
The Bombay Stock Exchange (BSE) regularly reviews and • Tata Power Company replaced Cipla Ltd. on July 28,
modifies its composition to be sure it reflects current 2008.
market conditions. The index is calculated based on a
1
From Wikipedia, the free encyclopedia BSE SENSEX
Code Name Sector Adj. Factor Weight in Index(%)
532977 Bajaj Auto Ltd Automotive 0.55 1.6
532454 Bharti Airtel Ltd Telecom 0.35 3
500103 BHEL Ltd Capital Goods 0.35 2.2
500087 Cipla Ltd Pharmaceutical 0.6 1.2
533278 Coal India Ltd Power 0.1 2
532868 DLF Ltd Construction 0.2 0.6
500010 HDFC Ltd Finance 0.90 5.43
500180 HDFC Bank Ltd Finance 0.85 5.31
500182 Hero Motorcorp Ltd Automotive 0.50 1.43
500440 Hindalco Industries Ltd Aluminum 0.6 1.5
500696 Hindustan Lever Ltd FMCG[3] 0.50 2.8
532174 ICICI Bank Ltd Finance 1.00 7.45
500209 Infosys Ltd Information Technology 0.85 8.29
500875 ITC Ltd FMCG[3] 0.70 6.39
532532 Jaiprakash Associates Ltd Housing Related 0.55 0.5
532286 Jindal Steel & Power Ltd Steel 0.55 1.8
500510 Larsen & Toubro Ltd Engineering 1 7
500520 Mahindra & Mahindra Ltd Automotive 0.75 2.3
532500 Maruti Suzuki Ltd Transport Equipments 0.50 1.3
532541 NTPC Ltd Power 0.15 1.2
500312 ONGC Ltd Oil & Gas 0.20 3.1
500325 Reliance Industries Ltd Oil & Gas 0.50 8.95
500112 SBI Finance 0.45 4.7
500900 Sterlite Industries Ltd Metal, Metal Products, and Mining 0.45 1.4
524715 Sun Pharmaceutical Industries Ltd Healthcare 0.40 1.5
532540 TCS Ltd Information Technology 0.3 3.8
500570 Tata Motors Ltd Transport Equipments 0.55 2
500400 Tata Power Ltd Power 0.70 1.6
500470 Tata Steel Ltd Metal, Metal Products & Mining 0.70 2.7
507685 Wipro Ltd Information Technology 0.20 1.4
• Sun Pharmaceutical Industries replaced Satyam
Computer Services on January 8, 2009
Milestones
• Hero Honda Motors Ltd. replaced Ranbaxy on June
29, 2009
• Cipla to replace Sun Pharma from May 3, 2010
• Grasim replaced JSPL in 2010
• Bajaj Auto replaced ACC from Dec 6th, 2010
• Coal India replaced Reliance Infrastructure and Sun
Pharmaceutical replaced Reliance Communications
from Aug 8th, 2011
The graph of SENSEX from July 1997 to March 2011
2
From Wikipedia, the free encyclopedia BSE SENSEX
Here is a timeline on the rise of the SENSEX through Indian • - The SENSEX on December 5, 2006 crossed 14,000.
stock market history. • - The SENSEX on July 6, 2007 crossed 15,000 mark.
• - On July 25, 1990, the SENSEX touched the four-digit • - The SENSEX on September 19, 2007 crossed the
figure for the first time and closed at 1,001 in the 16,000 mark.
wake of a good monsoon and excellent corporate • - The SENSEX on September 26, 2007 crossed the
results. 17,000 mark for the first time.
• - On January 15, 1992, the SENSEX crossed the • - The SENSEX on October 9, 2007 crossed the 18,000
2,000-mark and closed at 2,020 followed by the mark for the first time.
liberal economic policy initiatives undertaken by the • - The SENSEX on October 15, 2007 crossed the 19,000
then finance minister and current Prime Minister Dr mark for the first time.
Manmohan Singh. • - The SENSEX on October 29, 2007 crossed the 20,000
• - On February 29, 1992, the SENSEX surged past the mark for the first time.
3000 mark in the wake of the market-friendly Budget • - The SENSEX on January 8, 2008 touched all time
announced by Manmohan Singh. peak of 21078 before closing at 20873.[4]
• - On March 30, 1992, the SENSEX crossed the • - The SENSEX on November 5, 2010 closes at 20,893.6
4,000-mark and closed at 4,091 on the expectations with highest peak in two years.
of a liberal export-import policy. It was then that the
Harshad Mehta scam hit the markets and SENSEX May 2006
witnessed unabated selling. On May 22, 2006, the SENSEX plunged by 1100 points dur-
• - On October 8, 1999, the SENSEX crossed the ing intra-day trading, leading to the suspension of trad-
5,000-mark as the Bharatiya Janata Party-led ing for the first time since May 17, 2004. The volatili-
coalition won the majority in the 13th Lok Sabha ty of the SENSEX had caused investors to lose Rs 6 lakh
election. crore (US$131 billion) within seven trading sessions. The
• - On February 11, 2000, the information technology Finance Minister of India, P. Chidambaram, made an un-
boom helped the SENSEX to cross the 6,000-mark scheduled press statement when trading was suspended
and hit and all time high of 6,006. to assure investors that nothing was wrong with the fun-
• - On June 20, 2005, the news of the settlement damentals of the economy, and advised retail investors
between the Ambani brothers boosted investor to stay invested. When trading resumed after the reas-
sentiments and the scrips of RIL, Reliance Energy, surances of the Reserve Bank of India and the Securities
Reliance Capital and IPCL made huge gains. This and Exchange Board of India (SEBI), the SENSEX managed
helped the SENSEX crossed 7,000 points for the first to move up 700 points, still 450 points in the red.
time. The SENSEX eventually recovered from the volatility,
• - On September 8, 2005, the Bombay Stock and on October 16, 2006, the SENSEX closed at an all-time
Exchange’s benchmark 30-share index – the SENSEX high of 12,928.18 with an intra-day high of 12,953.76. This
- crossed the 8000 level following brisk buying by was a result of increased confidence in the economy and
foreign and domestic funds in early trading. reports that India’s manufacturing sector grew by 11.1%
• - The SENSEX on November 28, 2005 crossed 9000 to in August 2006.
touch 9000.32 points during mid-session at the • - The SENSEX on October 30, 2006 crossed 13,000 and
Bombay Stock Exchange on the back of frantic still riding high at the Bombay Stock Exchange for
buying spree by foreign institutional investors and the first time. It took 135 days to reach 13,000 from
well supported by local operators as well as retail 12,000. And 124 days to reach 13,000 from 12,500. On
investors. October 30, 2006 it touched a peak of 13,039.36 &
• - The SENSEX on February 6, 2006 touched 10,003 closed at 13,024.26.
points during mid-session. The SENSEX finally closed • - The SENSEX on December 5, 2006 crossed 14,000
above the 10,000-mark on February 7, 2006. and touched a peak of 14028 at 9.58AM(IST) while
• - The SENSEX on March 21, 2006 crossed 11,000 and opening for the day December 5, 2006.
touched a peak of 11,001 points during mid-session • - The SENSEX on July 6, 2007 crossed another
at the Bombay Stock Exchange for the first time. milestone and reached a magic figure of 15,000. it
However, it was on March 27, 2006 that the SENSEX took almost 7 month and 1 day to touch such a
first closed at over 11,000 points. historic miles
• - The SENSEX on April 20, 2006 crossed 12,000 and
touched a peak of 12,004 points during mid-session May 2009
at the Bombay Stock Exchange for the first time.
On May 18, 2009, the SENSEX surged 2110.79 points from
• - The SENSEX on October 30, 2006 crossed 13,000 for
the previous closing of 12174.42 this leading to the sus-
the first time. It touched a peak of 13,039.36 and
pension of trade for the whole day.This event created
finally closed at 13,024.26.
3
From Wikipedia, the free encyclopedia BSE SENSEX
history in Dalal Street, by being the first ever time that funds acting through P-notes might therefore cause
trade had been suspended for an increase in value. This volatility in the Indian markets.
rally is primarily due to the victory of the UPA in the 15th However the proposals of SEBI were not clear and
General elections. Trading was open for that day only for this led to a knee-jerk crash when the markets opened
55 seconds. Initially 25 seconds and 30 seconds market on the following day (October 17, 2007). Within a minute
reached upper freeze limit twice in that day itself. of opening trade, the SENSEX crashed by 1744 points or
about 9% of its value - the biggest intra-day fall in Indi-
Effects of the Subprime crisis in the U.S an stock markets in absolute terms till then. This led to
On Monday July 23, 2007, the SENSEX touched a new automatic suspension of trade for 1 hour. Finance Min-
height of 15,733 points. On July 27, 2007 the SENSEX wit- ister P. Chidambaram issued clarifications, in the mean-
nessed a huge correction because of selling by Foreign In- time, that the government was not against FIIs and was
stitutional Investors (FIIs) and global cues to come back not immediately banning PNs. After the market opened
to 15,160 points by noon. Following global cues and at 10:55 AM, the index staged a comeback and ended the
heavy selling in the international markets, the BSE day at 18715.82, down 336.04 from the last day’s close.
SENSEX fell by 615 points in a single day on Wednesday This was, however not the end of the volatility. The
August 1, 2007. next day (October 18, 2007), the SENSEX tumbled by
• - The SENSEX (Sensitivity Index) on September 19, 717.43 points — 3.83 per cent — to 17998.39. The slide
2007 crossed the 16,000 mark and reached a historic continued the next day when the SENSEX fell 438.41
peak of 16322 while closing. The bull hits because of points to settle at 17559.98 at the end of the week, after
the rate cut of 50 bit/s in the discount rate by the touching the lowest level of that week at 17226.18 during
Fed chief Ben Bernanke on September 26, 2007 the day.
crossed the 17,000 mark for the first time, creating a After detailed clarifications from the SEBI chief M.
record for the second fastest 1000 point gain in just 5 Damodaran regarding the new rules, the market made a
trading sessions. It failed however to sustain the 879-point gain on October 23, thus signalling the end of
momentum and closed below 17000. The SENSEX the PN crisis.
closed above 17000 for the first time on the following • - The SENSEX crossed the 20k mark for the first time
day. Reliance group has been the main contributor in with a massive 734.5 point gain but closed below the
this bull run, contributing 256 points. This also 20k mark. It took 11 days to reach from 19k to 20k.
helped Mukesh Ambani’s net worth to grow to over The journey of the last 10,000 points was covered in
$50 billion or Rs.2 trillion. It was also during this just 869 sessions as against 7,297 sessions taken to
record bull run that the SENSEX for the first time touch the 10,000 mark from 1,000 levels. In 2007
zoomed ahead of the Nikkei of Japan. alone, there were six 1,000-point rallies for the
• - The SENSEX crossed the 18k mark for the first time SENSEX.
on October 9, 2007. The journey from 17k to 18k took • Business Standard
just 8 trading sessions which is the third fastest 1000
point rise in the history of the SENSEX. The SENSEX January 2008
closed at 18,280 at the end of day. This 788 point gain In the third week of January 2008, the SENSEX experi-
on October 9 was the second biggest single day enced huge falls along with other markets around the
absolute gains. world. On January 21, 2008, the SENSEX saw its highest
• - The SENSEX crossed the 19k mark for the first time ever loss of 1,408 points at the end of the session. The
on October 15, 2007. It took just 4 days to reach from SENSEX recovered to close at 17,605.40 after it tumbled to
18k to 19k. This is the fastest 1000 points rally ever the day’s low of 16,963.96, on high volatility as investors
and also the 640 point rally was the second highest panicked following weak global cues amid fears of a re-
single day rally in absolute terms. This made it a cession in the US.
record 3000 point rally in 17 trading sessions overall. The next day, the BSE SENSEX index went into a free
Therefore the US Subprime crisis has a great effect even fall. The index hit the lower circuit breaker in barely a
on INDIA.gold cross the psychological barrier. minute after the markets opened at 10 AM. Trading was
suspended for an hour. On reopening at 10.55 AM IST,
Participatory notes issue the market saw its biggest intra-day fall when it hit a low
On October 16, 2007, SEBI (Securities & Exchange Board of 15,332, down 2,273 points. However, after reassurance
of India) proposed curbs on participatory notes which ac- from the Finance Minister of India, the market bounced
counted for roughly 50% of FII investment in 2007. SEBI back to close at 16,730 with a loss of 875 points.[5]
was not happy with P-notes because it was not possible Over the course of two days, the BSE SENSEX in India
to know who owned the underlying securities, and hedge dropped from 19,013 on Monday morning to 16,730 by
Tuesday evening or a two day fall of 13.9%.[5]
4
From Wikipedia, the free encyclopedia BSE SENSEX
• - SENSEX crashes below the psychological 5 figure ister P. Chidambaram issued clarifications, in the mean-
mark of 10K, following extremely negative global time, that the government was not against FIIs and was
financial indications in US and other countries. not immediately banning PNs. After the market opened
Exactly one year back in October 2007, SENSEX had at 10:55 AM, the index staged a comeback and ended the
gone past the 20K mark. day at 18715.82, down 336.04 from the last day’s close.
• This was, however not the end of the volatility. The
next day (October 18, 2007), the SENSEX tumbled by
Major crashes since 2000 717.43 points — 3.83 per cent — to 17998.39. The slide
continued the next day when the SENSEX fell 438.41
points to settle at 17559.98 at the end of the week, after
May 2006 touching the lowest level of that week at 17226.18 during
On May 22, 2006, the SENSEX plunged by 1100 points dur- the day.
ing intra-day trading, leading to the suspension of trad- After detailed clarifications from the SEBI chief M.
ing for the first time since May 17, 2004. The volatility Damodaran regarding the new rules, the market made a
of the SENSEX had caused investors to lose Indian rupees 879-point gain on October 23, thus signalling the end of
6 lakh crore ($131 billion) within seven trading sessions. the PN crisis.
The Finance Minister of India, P. Chidambaram, made
an unscheduled press statement when trading was sus- January 2008
pended to assure investors that nothing was wrong with In the third week of January 2008, the SENSEX experi-
the fundamentals of the economy, and advised retail in- enced huge falls along with other markets around the
vestors to stay invested. When trading resumed after the world. On January 21, 2008, the SENSEX saw its highest
reassurances of the Reserve Bank of India and the Securi- ever loss of 1,408 points at the end of the session. The
ties and Exchange Board of India (SEBI), the SENSEX man- SENSEX recovered to close at 17,605.40 after it tumbled to
aged to move up 700 points, still 450 points in the red. the day’s low of 16,963.96, on high volatility as investors
The SENSEX eventually recovered from the volatility, panicked following weak global cues amid fears of a re-
and on October 16, 2006, the SENSEX closed at an all-time cession in the US.
high of 12,928.18 with an intra-day high of 12,953.76. This The next day, the BSE SENSEX index went into a free
was a result of increased confidence in the economy and fall. The index hit the lower circuit breaker in barely a
reports that India’s manufacturing sector grew by 11.1% minute after the markets opened at 10 AM. Trading was
in August 2006. suspended for an hour. On reopening at 10.55 AM IST,
the market saw its biggest intra-day fall when it hit a low
Effects of the subprime crisis in the U.S. of 15,332, down 2,273 points. However, after reassurance
On July 23, 2007, the SENSEX touched a new high of from the Finance Minister of India, the market bounced
15,733 points. On July 27, 2007 the SENSEX witnessed a back to close at 16,730 with a loss of 875 points.[5]
huge correction because of selling by Foreign Institution- Over the course of two days, the BSE SENSEX in India
al Investors and global cues to come back to 15,160 points dropped from 19,013 on Monday morning to 16,730 by
by noon. Following global cues and heavy selling in the Tuesday evening or a two day fall of 13.9%.[5]
international markets, the BSE SENSEX fell by 615 points
in a single day on August 1, 2007.
SENSEX falls
Participatory notes issue Some major single-day falls of the SENSEX have occurred
On October 16, 2007, SEBI (Securities & Exchange Board on the following dates:[8]
of India) proposed curbs on participatory notes which ac- 1. January 21, 2008 --- 1,408.35 points
counted for roughly 50% of FII investment in 2007. SEBI 2. Oct 24, 2008---1070.63 points
was not happy with P-notes because it was not possible to 3. March 17, 2008 --- 951.03 points
know who owned the underlying securities,[6] and hedge 4. July 6, 2009 --- 870 points
funds acting through P-notes might therefore cause 5. January 22, 2008 --- 857 points
volatility in the Indian markets.[7] 6. February 11, 2008 --- 833.98 points
However the proposals of SEBI were not clear and 7. May 18, 2006 --- 826 points
this led to a knee-jerk crash when the markets opened 8. October 10, 2008 --- 800.10 points
on the following day (October 17, 2007). Within a minute 9. March 13, 2008 --- 770.63 points
of opening trade, the SENSEX crashed by 1744 points or 10. December 17, 2007 --- 769.48 points
about 9% of its value - the biggest intra-day fall in Indi- 11. January 7, 2009 --- 749.05 points
an stock markets in absolute terms till then. This led to 12. March 31, 2007 --- 726.85 points
automatic suspension of trade for 1 hour. Finance Min- 13. October 6, 2008 --- 724.62 points
5
From Wikipedia, the free encyclopedia BSE SENSEX
14. October 17, 2007 --- 717.43 points [5] ^ rediff Business Bureau (2008-01-21). "The 10
15. September 15, 2008 --- 710.00 points biggest falls in SENSEX history". MarketWatch.
16. September 22, 2011 --- 704.00 points http://www.rediff.com/money/2008/jan/
17. January 18, 2007 --- 687.82 points 21spec1.htm. Retrieved 2008-01-23.
18. November 21, 2007 --- 678.18 points [6] "What are P-Notes?". October 17, 2007.
19. August 16, 2007 --- 642.70 points http://www.rediff.com/money/2007/oct/
20. August 17, 2009 --- 626.71 points 17spec.htm. Retrieved February 21, 2011.
21. June 27, 2008 --- 600.00 points [7] Vaidyanathan, R. (Oct 24, 2007). "Why
22. February 24, 2011 --- 545.92 points Participatory Notes are dangerous". The Hindu.
23. November 12, 2010 --- 432 Points http://www.thehindubusinessline.in/2007/10/24/
24. November 16, 2010 --- 444.55 Points stories/2007102450800800.htm. Retrieved February
25. February 4, 2011 --- 441.92 Points 22, 2011.
[8] "The Hindu News Update Service". Hindu.com.
References http://www.hindu.com/thehindu/holnus/
001200801221826.htm. Retrieved 2011-09-19.
[1] BSE SENSEX weighting methodology via Wikinvest
[2] Handbook of Statistics on Indian Economy
[3] ^ Fast moving consumer goods
External links
[4] "Sensex hits 21,000; ends up 61 points - Rediff.com • SENSEX
Business". In.rediff.com. 2008-01-08. • DOLLEX-30
http://in.rediff.com/money/2008/jan/ • Bombay Stock Exchange
08sensex.htm. Retrieved 2011-09-19.
Retrieved from "http://en.wikipedia.org/w/index.php?title=BSE_SENSEX&oldid=471501694"
Categories:
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• Indian stock market indices
• BSE Sensex
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