SHARETIPSINFO >> Articles Directory >>Why to trade in Sensex or is it worth doing trading in Bombay stock exchange i.e BSE


BSE 30 or the Sensex as it is most commonly known is the prime index of the Bombay Stock Exchange. The Sensex is made of 30 stocks of leading companies that are listed at the Bombay Stock Exchange. The Sensex was initially started 1st day of January in the year 1986 with 30 stocks. Subsequently over the years these stocks were modified on the basis of the condition of the market and Indian economy. The Sensex is maintained by the BSE authorities and the modifications in the listed stocks are done on the basis of the recommendations from the BSE Index Committee that is made up of independent professionals and experts on stock market. The Sensex is one of the most popular indexes in the country and there are so many reasons for Sensex being the preferred index for investment.

Firstly the Sensex is made of 30 stocks of the most reputed companies and largest companies in India. These companies are the leaders in the stock market in terms of market capitalization. So with your investment in the Sensex you are indirectly banking up on the leading companies India that control the business and economy of the country to a great extent. Most prestigious companies like ACC and Reliance Industries, Wipro are part of the Sensex and that is the reason that the BSE Sensex scores a steady growth over the years. As these companies that make the Sensex are regularly revised on the basis of the market conditions you can sure of the same performance of the Sensex over the years.

The Sensex is managed by experts and the value of the Sensex is calculated on the basis of the Free Floating Capitalization Method that gives you the optimum pricing of the index. This is a variation of the capitalization method in which the floating share of the company is taken into consideration for calculating the index. In this calculation the outstanding shares of the company is not considered rather the number of shares that are available for trading are calculated. Therefore the index is more powerful and active in nature.

The thirty companies that are listed in the BSE SENSEX are from diverse industries and sectors. This makes the Sensex a complete index and as an investor your risk is reduced. Dependency on one sector or two sectors is considered more risky when you are investing in the index. This is because of the fact that weakness in one particular industry will directly and intensely affect the performance of the index. In case of BSE Sensex this risk factor is effectively reduced by incorporating stocks from different sectors including cement, technology, banking, finance, manufacturing, pharmaceuticals, oil and IT. So by investing in Sensex you are eventually investing in all the major sectors and in the leading companies from these sectors.

Over the years since the Sensex was formed the index has performed steadily and gave great returns to its investors. The BSE Sensex gave as much as 18.6% return to its investors that is an extraordinary performance in terms of return from investment.

Considering all these factors this can be said that investing in the Sensex is a profitable proposition for any investor in the Indian stock market. The Sensex is made with the most prominent companies with excellent market capitalization and above all the stocks that are considered to make the Sensex are the most actively traded stocks in the Bombay Stock Exchange which is the largest stock exchange in India if we consider the number of companies listed in the exchange. BSE Sensex is the most prominent and the prime index in the country that reflects the overall stock market position in the country. You can be rest assured of the fact that your investment in the BSE index will give you great returns in the long run. So if you are considering investment directly in the Sensex or through the index funds always consider the BSE Sensex to be your first priority.


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