Sensex is an index or an indicator of the financial performance of the companies listed in Bombay stock exchange. Sensex constitutes of 30 companies and when Sensex goes down it signifies that majority of the companies’ stock prices have fallen down and when Sensex goes up it signifies that majority of the companies’ stock prices have gone up.
Sensex is an abbreviation of the Bombay Stock Exchange’s SENSitive IndEX and was compiled on January 1 1986. At the time of formation of Sensex, the method adopted for calculating Sensex was to include 30 of the largest stocks on the index and weight given for each of those stocks was based on their market cap.
Base value of Sensex was set to 100 and each of the 30 companies in Sensex contributed to the weighted average of market capitalization to the index. Larger the size, higher the weightage.