Index
Bombay Stock Exchange, S&P BSE Index, Sensex – What is it?
Established in 1875 at Dalal Street, Mumbai, BSE Limited (earlier, Bombay Stock Exchange) is the oldest stock exchange in Asia. Stock exchanges provide a trading platform for investors to buy and sell equity and fixed income securities or shares of companies listed on stock exchanges.
Like the Nifty Index used by its counterpart National Stock Exchange (NSE), the S&P BSE Index is used to track the benchmark performance of shares of companies listed on the BSE exchange. There are more than 85 S&P BSE indices whose job is to read stock market movements using weighted averages and market capitalizations of companies representing various sectors of the economy.
S&P BSE Sensex, like NSE’s NIFTY 50, is the most cited index used by BSE to track how the stock market is performing. It consists of 30 selected actively traded stocks of BSE listed companies. Overall, the S&P BSE indices are calculated using the free-float market capitalization method, helpful for benchmarking fund portfolios, index fund launches, exchange traded funds (ETFs) and other trading options.
Let’s take a closer look at the classification of S&P BSE indices and what they mean.
Types of S&P BSE indices and what they mean
S&P Dow Jones Indices and BSE Limited have a strategic partnership to calculate, publish and license a suite of BSE indices — hence, called S&P BSE Indices. These indices are used to track the benchmark performance of equity and fixed-income market securities.
Equity market indices include BSE Sensex broad indices of market capitalisation, sectors and industries, thematics, strategies, stability and volatility indices. Similarly, BSE uses composite, government, corporate and money market indices to track the fixed income market.
Here’s what they mean
BSE Sensex Market Cap/Broad Index
Broad-based indices cover large-cap, mid-cap and small-cap companies. There are 23 BSE Sensex market cap broad indices as on March 31, 2023, which act as market indicators for the Indian stock market. Some broad indicators include the following:
BSE Sensex Sector and Industry Indices
Sectoral indices serve as a benchmark for measuring the performance of stocks of companies representing several broadly defined economic sectors. Indices include companies in the S&P BSE 500 index that represent nine sectors of the economy and each index has a minimum of 10 companies.
Currently, there are 20 S&P BSE sectoral indices, including:
BSE Thematic Index
Thematic index is another calculation method used by S&P BSE to measure the performance of companies representing movement in a particular theme. Currently, there are nine thematic indices managed by S&P BSE, including:
BSE Strategy Index
Similarly, strategy-based investment indices managed by S&P BSE include:
BSE Sustainability Index
Such indices measure the securities of companies that meet sustainability investment criteria, commitments to reduce risks arising from climate change, as well as the performance of the top 25 “green” companies listed on the BSE.
BSE Volatility Index
Realized volatility indices measure the historical volatility of the S&P BSE Sensex.
BSE Composite Index
Currently there is a composite index.
BSE Government Index
Such indices are designed to track the performance of local-currency denominated sovereign and government bonds as well as government bills etc.
BSE Corporate Index
Such indices are designed to track the performance of local-currency denominated bonds of companies representing the corporate, financial, service, utility and industrial sectors.
BSE Money Market Index
related to: India Stock Market News March 2023
What is the S&P BSE Sensex Index?
The S&P BSE Sensex is an index of 30 companies selected from the S&P BSE 100 Index listed on the BSE. Stocks are either large-cap or mega-cap, where the company’s main revenue is derived from its core activities.
The value of S&P BSE Sensex is calculated based on free float market capitalization method. The index measures market movements based on which investors make trading decisions.
The performance of the S&P BSE Sensex helps investors understand how the overall equity market is performing. When there are more buyers of the stock, the S&P BSE Sensex chart reading represents the cost of the share and more sellers drive down the price and the reading falls.
Similar to the S&P BSE Sensex is the NIFTY 50 index used by the NSE which tracks the performance of 50 large and liquid stocks using a weighted average and market capitalization calculation method.
Supporting resources
What is Sensex and how to invest in it in March 2023?
What is Nifty, types of indices, and what they mean
What is the difference between BSE S&P Sensex and Nifty 50?
How to Invest in Share Market: How to Buy Stocks Easily
Frequently Asked Questions (FAQs)
What are the different types of S&P BSE indices?
S&P Dow Jones Indices and BSE Limited have a strategic partnership to calculate, publish and license a suite of BSE indices — hence called S&P BSE Indices. Equity market indices include BSE Sensex broad indices of market capitalisation, sectors and industries, thematics, strategies, stability and volatility indices. Similarly, BSE uses composite, government, corporate and money market indices to track the fixed income market.
What is the function of BSE Sensex market cap/broad index?
Broad-based indices cover large-cap, mid-cap and small-cap companies and include indices like S&P BSE SENSEX, S&P BSE 100, S&P BSE SENSEX 50 among other key indices.
What is the S&P BSE Sensex Index?
The S&P BSE Sensex is an index of 30 companies selected from the S&P BSE 100 Index listed on the BSE. Stocks are either large-cap or mega-cap, where the company’s main revenue is derived from its core activities.
What is the difference between subjective and strategy indicators?
Thematic indices are a calculation method used by BSE to measure the performance of companies that represent a movement in a particular theme. Similarly, BSE strategy indices track the performance of a portfolio of stocks based on a combination of factors.
What is BSE Sensex Sector and Industry Index?
Sectoral indices serve as a benchmark for measuring the performance of stocks of companies representing several broadly defined economic sectors. Indices include companies in the S&P BSE 500 index that represent nine sectors of the economy and each index has a minimum of 10 companies.