Similar to Nifty 50, the SENSEX is a basket of the top 30 companies listed on the BSE. While the nifty 50 is an index of top 50 companies which are listed on NSE.
What is Sensex
Sensex (Stock Exchange Sensitive Index) is a market index consisting of 30 top-performing companies listed on the Bombay Stock Exchange in India.
Sensex was launched 1986 by the Bombay Stock Exchange and is considered a benchmark index for the Indian equity market’s performance.
The stocks included in Sensex are selected by the S&P BSE Index Committee based on five criteria.
These criteria are as follows:
- The companies must be listed on the Bombay Stock Exchange in India.
- It must consist of large or mega-cap stocks.
- It should be relatively liquid.
- The companies must generate earnings from core activities.
- The companies must contribute to keeping the sector balanced with the country’s equity market.
List of sectors in Sensex
Sensex 30 companies cover 18 different sectors to provide a diverse representation of the Indian stock market.
The banking sector holds the highest weightage in the index.
|IT Consulting & Software||14.61%|
|Integrated Oil & Gas||11.84%|
|Construction & Engineering||4.13%|
|Cars & Utility Vehicles||3.35%|
|Cement & Cement Products||1.26%|
|Iron & Steel/Interm.Products||1.26%|
|Finance (including NBFCs)||1.18%|
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List of Sensex 30 Companies With Weightage (As on April 2023)
Each stock in the Sensex has a different weightage in the index. The weightage of a stock in sensex is determined by its free-float market capitalization.
Free-float market capitalization means the total market value of a company’s publicly traded shares that are available for trading in the stock market. The larger the free float market cap, the higher will be the weightage.
|1.||Reliance Industries Ltd.||Integrated Oil & Gas||11.84%|
|2.||HDFC Bank Ltd.||Banks||10.76%|
|3.||ICICI Bank Ltd.||Banks||9.27%|
|4.||Hindustan Unilever Ltd.||Personal Products||7.29%|
|5.||Infosys Ltd.||IT Consulting & Software||6.46%|
|6.||ITC Ltd.||Cigarettes,Tobacco Products||5.43%|
|7.||TCS||IT Consulting & Software||4.77%|
|8.||Larsen & Toubro Ltd.||Construction & Engineering||4.13%|
|9.||Kotak Mahindra Bank||Banks||4.12%|
|13.||Bharti Airtel||Telecom Services||2.84%|
|14.||Bajaj Finance||Holding Companies||2.42%|
|16.||Mahindra & Mahindra Ltd.||Cars & Utility Vehicles||1.7%|
|17.||Maruti Suzuki India||Cars & Utility Vehicles||1.65%|
|18.||HCL Tech||IT Consulting & Software||1.63%|
|19.||Titan Co||Other Apparels & Accessories||1.59%|
|21.||UltraTech Cement||Cement & Cement Products||1.26%|
|22.||Tata Steel||Iron & Steel/Interm.Products||1.26%|
|23.||Bajaj Finserv||Finance (including NBFCs)||1.18%|
|25.||Power Grid||Electric Utilities||1.17%|
|26.||Nestle India||Packaged Foods||1.12%|
|28.||Tech Mahindra||IT Consulting & Software||0.92%|
|29.||Dr Reddy’s Labs||Pharmaceuticals||0.87%|
|30.||Wipro||IT Consulting & Software||0.83%|
It is important to note that the weightage of each company in Sensex can change over time, depending on the company’s performance and the prevailing market conditions.
The top 10 stocks represent almost 67.48% of the total weightage of Sensex 30 companies. The other 20 stocks also have their respective weightage, but their contribution to the index is relatively less.
How is Sensex Calculated
Sensex is calculated using the free-float market capitalization method.
Free-float market capitalization is calculated by multiplying the company’s total outstanding shares by its market price and adjusting for shares held by the government, promoters, and other strategic investors.
Free Float Market Capitalization = Market Capitalization * Free Float Factor
Where market capitalization is the market value of the company, which is calculated as:
Market capitalization = Share Price Per Share * Number of Shares Issued by the Company
Once the free-float market capitalization of all the companies in Sensex is calculated, the index is computed using the following formula:
Sensex Value = (Total Free-float market capitalization/ Base market capitalization) * Base period index value.
The base year for calculating the Sensex is 1978-79, and the base value is 100 index points. This means that if the Sensex is at 50,000, it is 500 times higher than its base value of 100.
How To Invest In Sensex
Likewise invest in Nifty 50, you can invest in Sensex through Index funds, ETF, or direct equity.
You can choose the method depending on your investment goals, risk appetite, and financial situation.
Let’s discuss each of them:
#1. Invest in Sensex Through Exchange-Traded Funds (ETFs)
ETFs are investment funds that track the performance of an underlying index such as Sensex. By investing in an ETF that tracks Sensex’s performance, you can get exposure to the index’s top-performing companies without buying individual stocks.
ETFs are traded on stock exchanges and can be bought and sold like individual stocks. You can also invest in bank nifty through ETFs to get the potential return of banking sector.
Steps to Invest in Sensex ETFs:
Step #1. You need to open a demat and trading account to invest in Sensex.
Step #2. Log in to your Demat account using your credentials.
Step #3. You can add the funds to your trading account through net banking, debit card, or UPI.
Step #4. Search for Sensex ETFs on your broker’s trading platform.
Step #5. Click on the “Buy” button to place the order.
Step #6. Enter the quantity of the ETF, set the price and choose order type such as market price or limit order.
Step #7. Swipe on the ‘Buy’ button to place your order.
You can track the performance of the Sensex ETFs in the holding section of your trading platform. You can also invest in Sensex by using the technical indicators to predict the next candlestick pattern.
#2. Invest in Sensex Through Index Funds
Index funds are mutual funds that track the performance of an underlying index such as Sensex. These funds invest in the same stocks as the index and aim to replicate the index’s performance.
Index funds can provide you with a low-cost and efficient way to invest in Sensex.
Steps to Invest in BSE Sensex index funds:
Step #1. You need to open a demat and trading account with a registered stockbroker. You can check the step-by-step process to open a Zerodha account with low brokerage fees.
Step #2. You can research and choose the best mutual fund that tracks the performance of the BSE Sensex index.
Step #3. Invest the desired amount of capital in the chosen index fund.
Step #4. You can select between starting a SIP or making a one-time lump sum investment.
Step #5. Complete your payment process.
Step #6. Monitor your index fund investment regularly and make changes as needed.
#3. Invest in Sensex Through Direct Equity Investment
You can directly invest in the Sensex companies with the same percentage as weightage in the index. This means that you can directly buy the stocks in the quantity which is equivalent to the stock’s weightage.
You can get exposure to Sensex’s performance and potentially generate higher returns.
However, investing in direct equity in the same proportion of Sensex Index is difficult. The primary reason for this is that you cannot purchase stocks in fractions, and buying individual stocks to maintain the same ratio would require a higher investment.
As a result, you can choose the alternative investment options, such as index funds or exchange-traded funds (ETFs), which can be more practical for you to invest in the Sensex.
To invest in Sensex through direct equity investment, here are the steps to follow:
Step #1: Open a demat and trading account
To invest in Sensex through direct equity investment, you need to open a demat and trading account with a registered stockbroker in India.
You can choose from several online brokerage firms such as Zerodha, Groww, or Upstox. Ensure that you select a broker with a good reputation, low brokerage fees, and excellent customer service.
Step #2: Add funds to your trading account
You need to add funds to your trading account with the desired amount of capital. You can add funds through netbanking, debit card or UPI.
Step 3: Research & choose the stock you want to invest in
Before investing in individual stocks, you need to research the individual companies listed on the BSE that are part of the Sensex index. Once you have researched the companies, you can select the ones you want to invest in.
Step 4: Place the orders
You can place buy orders through your trading account. Ensure that you use limit orders instead of market orders to have more control over the buy price.
Follow the steps to place your buy order:
- Go to the watchlist in your trading platform
- Search the specific stock in the search bar
- Click on the “Buy” button
- Enter the no. of stocks you want to buy
- Review and submit the order
Step 5: Monitor your portfolio regularly
You can monitor your portfolio regularly and make changes as needed based on market conditions or changes in the company’s fundamentals.
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The minimum amount required to invest in Sensex index funds is one unit.
The minimum amount required to invest in Sensex index funds as low as Rs. 500 through monthly SIPs.
The risks of investing in Sensex include market volatility, company-specific risks, and economic risks.
Yes, you can invest in Sensex through mutual funds that track the performance of the index.
The S&P BSE Sensex is a stock market index that tracks the performance of the 30 most significant and financially stable companies across key sectors of the Indian economy listed on the BSE Ltd.
The Sensex is an index of the top 30 companies listed on the BSE, while the Nifty is an index of the top 50 companies listed on the National Stock Exchange (NSE) in India.
The Sensex is calculated in real-time during market hours and updated every 15 seconds.
The Sensex is computed based on the free-float market capitalization-weighted methodology.
The main objective of Sensex is to provide a benchmark for the performance of the Indian stock market and reflect the market sentiments towards the top-performing companies listed on the BSE.