Wednesday, November 21, 2007

Who are in the SENSEX?

Well, I may not be providing something new to all of you. But in an attempt to reorganize my understanding of the SENSEX, I am putting my thoughts down in simple layman's parlance.

In case you are wondering why a stock market index has a provocative term like Sensex, let me tell you it stands for something quite mundane -- The Bombay Stock Exchange Sensitive Index.

So, how do you measure the financial health of a country? It is madeby measuring the revenue the country generates. What do you mean by country generating revenue? It means the industries across different sectors present in a country generating revenue.

The Bombay Stock Exchange(BSE)-SENSEX is an index of the powerful 30 industry stocks in the country that represent various sectors in the country. And thus, they are the true reflection of country's economic might. The valuation of these 30 stocks account for one-fifth of market capitalization of BSE.

Who selects these 30 stocks?

They are selected by the Index Committee.

This committee consists of all sorts of individuals including academicians, mutual fund managers, finance journalists, independent governing board members and other participants in the financial markets.

So, what are those 30 companies that are responsible in showing the economic state of India?


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