BSE Sensex

The Bombay Stock Exchange's stock market index, known as the BSE SENSEX, stands for "Stock Exchange Sensitive Index." The BSE SENSEX is scientifically designed and reviewed according to internationally accepted standards. The BSE SENSEX is a basket of 30 constituent stocks (companies) representing large and liquid companies. It was first compiled in 1986. The base year of BSE SENSEX is 1978-79, and the base value of SENSEX is 100.

The BSE SENSEX is considered to be the reflection of the entire stock market in India. The SENSEX is India's oldest index and a barometer of the Indian economy. Market research analysts use SENSEX to determine India's overall growth, industry development, and stock market trend.

The list of SENSEX companies is revised semi-annually, i.e. in December and June of each year. To be a part of the list of 30 SENSEX companies, they have to meet the following criteria:

1. The company should be listed on BSE (Bombay Stock Exchange)
2. A SENSEX company should be a large-cap to mega-cap stock
3. The stocks of the company should be liquid, i.e., the stock is traded on the stock exchanges frequently
4. The company should generate revenue from its core activities

The technical analysis of BSE SENSEX is usually annualized in the perspective of short-term, medium-term, and long-term predictions of its movement. The short term is one to six weeks, the medium term is one to six months, and the long term means a span of one to six quarters.

As in July 2021, the BSE SENSEX has broken through the floor of the rising trend channel, indicating a slower initial rise in the long run. The rising channel is a chart pattern that forms when lower low-price points on a chart follow higher price points. That indicates a short-term bullish nature, that is, price rise. So, the price chart shows no resistance and suggests that the price will continue to rise.

The index has support (the level where the price usually stops falling and rises again) at around 38700 points in case of an adverse reaction. The RSI diverges negatively from the price, indicating the possibility of a downward reaction. Relative strength index (RSI) is used as a momentum indicator to measure the magnitude of price changes.

The 50-day moving average of BSE SENSEX was over 51000 in July 2021. A moving average is a trend indicator calculated by taking the average of closing prices over a given time to reveal the underlying trend. A price level above the 50-day moving average is considered bearish, and the reverse is a bearish indication. Here, the price level of BSE SENSEX as of the same period was over 52000, which means a bullish market for the index. Therefore, considering the overall technical indicators, the index is considered technically positive in the long run and the short term.

The BSE SENSEX is India's oldest stock index, having been established in 1986. Deepak Mohoni, a stock market analyst, coined the term SENSEX. It's a combination of the words "sensitive" and "index." The index took just a few years to cross the 1000 mark in July 1990. Earlier, the methodology followed to calculate the index was based on weighted market capitalization. But, with effect from September 2003, the method changed to the free-float capitalization method. Under this method, the number of shares available for sale under a company calculates the index

The market witnessed a boom after 2000 due to the onset of technological developments. In the same decade, in 2005, that BSE SENSEX reached 7000 points for the first time. The rapid growth continued, and the index crossed the 10000 marks in February 2006 and the 20000 marks in December 2007. Recently, in the year 2021, the BSE SENSEX index surpassed the historical mark of 50000 for the first time in February. The optimism in the index is continued since then and is expected to grow even more.