Sensex: BSE’s benchmark index

What is Sensex?

Sensex, short for "Sensitive Index," is India's oldest and most widely tracked stock market index. It serves as the barometer of the Indian stock market, comprising 30 of the largest, most liquid and financially sound companies listed on the Bombay Stock Exchange (BSE).

Since its launch on 1st January 1986, the Sensex has evolved to become the face of Indian equity markets, reflecting the country's economic transformation and growth story. The index tracks the performance of these carefully selected companies that collectively represent various sectors of the Indian economy.

The 30 Sensex companies

As of May 2025, the Sensex comprises the following 30 companies:

These companies represent major sectors of the Indian economy, including banking, information technology, energy, consumer goods, and manufacturing.

How is Sensex calculated?

Sensex is calculated using the free-float market capitalisation method, which considers only those shares that are readily available for trading in the market.

• Free-float market capitalisation: Each company's contribution to the index is determined by its free-float market capitalisation (share price × number of shares available for trading, excluding promoter/government holdings).
  
• Index formula: Sensex = (Total Free-float Market Cap of 30 companies / Base Market Cap) × Base Index Value (100)
• Base value and year: Sensex's base year is 1978-79, and its base value is 100 points. This provides a reference point for measuring the market's growth over time.

Historical milestones

The Sensex has witnessed several landmark moments in its journey, reflecting India's economic development:

• 1,000 points: 25th July 1990
• 5,000 points: 11th October 1999
• 10,000 points: 7th February 2006
• 20,000 points: 11th December 2007
• 30,000 points: 26th April 2017
• 40,000 points: 23rd May 2019
• 50,000 points: 21st January 2021
• 60,000 points: 24th September 2021
• 70,000 points: 14th November 2023
• 80,000 points: 9th April 2025

Each milestone tells a story of India's evolving market structure, policy reforms, global events, and investor sentiment over the decades.

The importance of Sensex

• Market benchmark: Sensex provides a single number to gauge the overall market performance and serves as a benchmark for comparing investment returns.
  
• Economic Indicator: It offers insights into the health of the Indian economy, as the constituent companies represent major sectors.
  
• Portfolio reference: Investors use it to evaluate their portfolio performance and make asset allocation decisions.
  
• Foreign investment gauge: International investors often track Sensex to assess India's economic stability and potential.
  

How to invest in Sensex?

Investors can gain exposure to Sensex through various instruments:

• Index funds: Mutual funds that replicate the composition and performance of Sensex by investing in the constituent stocks in similar proportions.
  
• Exchange Traded Funds (ETFs): Similar to index funds but traded on exchanges like individual stocks, offering greater liquidity and lower expense ratios.
  
• Derivatives: Futures and options contracts based on Sensex that allow investors to speculate on market movements or hedge their portfolios.
  
• Direct stock investment: Investors can create their own Sensex-like portfolio by directly investing in the constituent companies.
  

The Sensex has established itself as one of India's most important stock market indicators, reflecting the country's economic journey from a closed economy to one of the world's fastest-growing major economies. For investors, understanding Sensex and its components provides valuable context for navigating India's financial markets.

As India continues its growth trajectory, the Sensex will remain an essential tool for investors, economists, and policymakers to gauge market sentiment and economic trends. Whether you're assessing your investment portfolio, analysing economic conditions, or simply staying informed about India's financial markets, the Sensex offers a valuable lens through which to view India's economic landscape.