CWA learner
447 Points
Joined August 2011
The Sens*x is an indicator of all the major companies of the BSE.
If the Sens*x goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sens*x goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down.
Lets discuss how to calculate sens*x:-
step - 1
Today's market capitalisation
________________________ = we get "something*"
Yesterdays market capitalisation
Step - 2
Something* X Yesterdays sens*x = Todays sens*x
step - 3
When we divide the company market capitalisation by total capital then we will be getting the individual weigthage of the company i the sens*x.
What is market capitalisation:-
It is the worth of company interms of shares. Simply todays value of company shares.
What is free float market capitalisation
Company shares may hold by different types of investors. The governmet may hold some of the shares. Some of the shares may hold by founders, directors, FDI's etc. Now , only the "open market"shares that are free for trading by anyone , are called "free-float" shares.
When we calculating the sens*x we are interested in theses "free-float" shares.