Sensex 201:

Here's a more detailed post on the SENSEX index.

• In 1986, SENSEX was calculated on Market capitalization method and changed to free-float in 2003.
• This index gave a good metric to capture the bull runs and the bear runs.
• Bull market: The more optimistic trend in which the market starts as the economy seems to get better.There is increased investor confidence, in anticipation of future price increase.
• Bear market: This is the more pessimistic trend in which the market witnesses a steady drop. The investors tend to sell more, in order to minimize future losses. The generally accepted value is a decline of 20% or more over a two month period.
• The SENSEX reflects the free-float value of 30 component scrips relative to its base period.
• The base value of SENSEX is 100 index points.
• The dollar linked version of SENSEX is the Dollex-30.
• In order to make it to the top 30 of the component scrips of the SENSEX, the stocks need to display a listed history (traded on the BSE for at least 3 months); should have a trading frequency record for the previous 3 months; should figure in the top 100 companies listed by rank; its value should be at least 0.5% of the index; should represent the sector and have an acceptable track record.
• The closing value of SENSEX on a trading day is computed using the weighted averages of all trades on the SENSEX constituents in the last 30 minutes of the session.
• The index is reviewed for updates every quarter and the announcements of the new incoming and outgoing scrips are made 6 weeks in advance.

Priyanka S Vaidya