BSE Sensex

The BSE Sensex is a key benchmark index of the Indian stock market. It comprises a diversified set of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE). These stocks belong to the various sectors of the Indian economy, including Information Technology (IT), financial services, consumer goods, entertainment and media, metals, pharmaceuticals, automobiles, and energy. The BSE Sensex is a crucial indicator of the overall health and performance of the Indian stock market.

BSE Sensex typically includes 30 well-established and actively traded stocks from various sectors of the Indian economy. Some of the companies traditionally part of the BSE Sensex include:

It's important to note that the composition of the Sensex is subject to periodic reviews by the BSE, and changes may occur based on factors such as market capitalisation, liquidity, and overall market representation.

The value of the BSE Sensex is calculated using a free-float market capitalization-weighted methodology, which takes into account the market capitalisation and free-float factor of its constituent stocks. The formula used for the computation of the BSE Sensex’s value is as follows:

Index Value = (Total Free Float Market Capitalisation / Base Market Capitalisation) x Base Index Value

Here, total free float market capitalisation is the average market capitalisation of all 30 stocks in the index, base free-float market capitalisation is the average market capitalisation of the stocks in BSE Sensex on 3^rd April 1979, and the base index value is the value of the BSE Sensex as on the base date.

The weightage of individual stocks within the BSE Sensex is determined by their market capitalisation relative to the overall market capitalisation of all the stocks included in the index. As of January 2024, the weightage of top companies in the BSE Sensex are – HDFC Bank (13.61%), Reliance Industries (11.39%), ICICI Bank (8.39%), Infosys (7.29%), L&T (5.24%), ITC (5.14%), TCS (4.97%), Axis Bank (3.81%) and Bharti Airtel (3.5%).

Yes, futures and options (F&O) trading is possible in BSE Sensex. F&O trading in BSE Sensex involves the buying and selling of futures and options contracts, which derive their value from the underlying BSE Sensex index.
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The selection of stocks for the BSE Sensex is based on certain predefined criteria, and the process is managed by the Index Committee of the Bombay Stock Exchange (BSE). The criteria for selecting the stocks include factors, such as market capitalisation, sector representation, liquidity, trading frequency, and financial strength. The Index Committee reviews and updates the composition of the BSE Sensex through a semi-annual review every six months.
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The closing price of the BSE Sensex is calculated at the end of each trading day based on the weighted average closing prices of all stocks included in the index. 

The BSE Sensex index represents the performance of the top 30 stocks on the Bombay Stock Exchange (BSE). It’s not possible to buy or sell BSE Sensex units directly. However, you can trade Futures and Options (F&O) contracts with the BSE Sensex as the underlying asset. Alternatively, you can invest in mutual fund schemes targeting the stocks in the BSE Sensex index.