Sensex is short for “Stock Exchange Sensitive Index.”
It’s the main index of the Bombay Stock Exchange (BSE) and shows how India’s top 30 companies are performing.
You can think of Sensex like a thermometer for the Indian stock market.
When the Sensex goes up, it means most big companies are doing well.
When it drops, it means they’re not doing so well.
Sensex Meaning in Simple Words
Sensex is a number that reflects the average movement of the top 30 stocks listed on the BSE. These companies are selected based on:
- Size (market value)
- Trading volume
- Reputation
These are big and trusted names like Reliance, TCS, Infosys, and HDFC Bank.
Why is Sensex Important?
- It shows the overall health of the Indian economy
- Used by investors to understand market trends
- Helps compare how your investments are performing
How is Sensex Calculated?
Sensex is calculated using the free-float market capitalization method.
Simple Formula:
Sensex = (Current Market Value ÷ Base Market Value) × Base Index Value
- Base year = 1978–79
- Base index value = 100
- Only the free-float market cap (shares available for trading) is considered
Milestones in Sensex History
| Year | Milestone |
|---|---|
| 1990 | Crossed 1,000 |
| 2006 | Crossed 10,000 |
| 2014 | Crossed 25,000 |
| 2020 | Crossed 50,000 |
| 2024 | Crossed 75,000 |
| 2025 | Close to 80,000 mark (as of mid-2025)* |
(*Check latest numbers for up-to-date value)
Real-Life Example
If Sensex goes up by 500 points in a day, it means the average value of these 30 companies has increased. So, if you’ve invested in large-cap mutual funds or stocks, you likely made a gain that day.
