Normally every person comes across the news of Sensex being up or Sensex coming down but normally people lack the basic knowledge about this particular concept. BSE or the Bombay Stock exchange was established in the year 1875 and is located in Mumbai in India. This is Asia’s first and fastest stock exchange with a speed of 6 µs. This particular stock exchange comes with a comprehensive index which is the Sensex and is the popular equity index of BSE. It is also the most widely utilised and tracked indices in the industry.

 The stock market index is the concept that will be helpful in terms of wrecking the changes in the stock market and it has been perfectly created by picking up the securities listed on the stock exchange. The very basic criteria for choosing the stocks for the stock market index can be the market capitalisation or the overall industry. The stock market analyst Mr Deepak launched an index known as Sensex which is the combination of the terms of sensitive and index. This will help in reflecting the Bombay Stock exchange very easily. Sensex index will comprise 30 stocks on the Bombay Stock exchange and the stocks of the largest and the most actively traded stocks on the BSE. The criteria for selecting the stocks in this particular area will be:

1. It should be listed on BSE

2. It should be a large or mega-cap stock

3. It should be a relatively liquid stock

4. It should be based upon revenue generated from the core activities

5. It should be diversified and balanced in proper line with the Indian equity market

 The Sensex will help the people to have a clear-cut idea about the reflecting of the moments in the Indian stock market and if the Sensex will increase then it very well justifies that price of the underlying stocks will also be increased and vice versa. This is the oldest index in India and people consider it as a true reflection of the Indian economy. Several kinds of research analysts also refer to Sensex as a way of understanding the overall growth, development of any industry or country’s stock market trend in the whole process.

 The calculation of the Sensex is based upon a comprehensive formula which has been explained as:

●       Free float market capitalisation = market capitalisation * free float factor

 The free float factor is the percentage of the total shares of a company which they will be issuing and that will be readily available to the common public in terms of trading. This will also make sure that the total outstanding number of shares of the company will be easily made available to the people. Additionally, the shares issued to the government and promoter will not be available for training of the stock market will not be included. The market capitalisation will be the market value of the company and will be calculated by share price per share into the number of shares issued by the company.

 Hence, having a clear-cut idea about the basic differences between Sensex and nifty with the help of 5paisa is vital for the people to make sure that everything will be carried out very easily and effectively.