Nifty 50 and Sensex are the two indices that represent the Indian stock market. Nifty 50 tracks the top 50 stocks listed in the National Stock Exchange (NSE), and Sensex tracks the top 30 stocks listed in the Bombay Stock Exchange (BSE). 

The top 30 stocks in the BSE Sensex are selected based on several parameters that will be covered in the sections below. To understand what Sensex is deeply, we will look at its definition, how it is calculated, and how to invest in Sensex stocks.

What is Sensex?

The term Sensex is actually a combination of the words ‘Sensitive’ and ‘Index’. Market analyst Deepak Mohoni introduced it in 1986 to track the top stocks of the BSE. 

BSE Sensex shows you how 30 of the most significant companies listed on the Bombay Stock Exchange (BSE) are performing at any time. Yet, these companies are not just randomly picked. There is a method to the selection, and it ensures that the index remains a reliable indicator of market trends.

For a stock to be part of the Sensex:

  • The stock must be listed on the BSE.
  • It should be a large-cap or mega-cap stock.
  • The stock must offer high liquidity, meaning you can easily buy and sell it.
  • The company’s main business must generate substantial revenue.
  • It should contribute to the overall stability of India’s equity market.

The base value of the Sensex was merely 100 in 1986 when it was first introduced in the Indian share market. Despite the rise of digital trading and newer platforms, it remains a crucial benchmark for investors.

Because it includes companies across major industries, including banking, tech, healthcare, and manufacturing, its rise or fall offers a real-time snapshot of how the Indian economy is doing.

Calculating the Sensex: Formula with Examples 

Understanding how the BSE Sensex is calculated helps you grasp what market movements truly mean. The crucial aspect of this is market capitalisation. To calculate a company’s market capitalisation, multiply the total share count by its ongoing price of one share. 

Before 2003, the Sensex was measured using full market capitalisation, which considered every available share, including those held by promoters or governments. But as markets evolved, so did the calculation method.

Now, Sensex uses free-float market capitalisation. It includes only the publicly available shares for trading, excluding promoter holdings and locked-in shares.

Here’s the formula:

Free-Float Market Capitalisation (FFMC) = Free-Float Factor x Stock’s Market Capitalisation

To calculate the BSE Sensex:

Sensex = (Sum of FFMC of the leading 30 BSE Stocks/ Base Market Capitalisation) × Base value of the index

So when you hear that the Sensex “gained 500 points” in a day, that number reflects the change in the collective free-float value of the top 30 BSE stocks, compared to their original base.

Step-Wise Details to Invest in Sensex 30

Thinking of trading with BSE Sensex stocks? Great choice. Start your share market trading journey by following these simple steps: 

  1. Open a Demat & Trading Account

Before you do anything else, you will need a demat account to store your shares electronically. Along with that, a trading account is used to buy and sell shares on the exchange. Don’t worry, as it is quick and easy to open both. At Share.Market, you can open a demat account with zero opening fees.

  1. Link Your Bank Account

Next, link your savings account to your trading account. This lets you deposit money for investing and withdraw any profits with ease.

Once you are set up, you can either invest in the individual Sensex companies or go for mutual funds or ETFs (Exchange Traded Funds) that track the Sensex. These are great options if you are looking to diversify without having to manage multiple stocks.

Historical Movements Marked By Sensex 

The historical movements marked by the BSE Sensex over the years are no less than any major event in the Indian share market. Some of these historical movements or milestones have been described in the table below: 

Milestone Movement Event Year/Timeline
It took the Sensex just 4 years to jump from 100 to 1000. On 25th July 1990, Sensex touched 1000 and closed at 1001 points towards the end of the trading session. 1990
Just two years after reaching 1000, the Sensex crossed 2000 in 1992. This rapid rise could be attributed to the government’s liberal economic policies. 1992
In March 1992, the massive selling of shares influenced by Harshad Mehta led to the Sensex touching 4500. March 1992
Before everyone entered the millennium year 2000, the Sensex reached the grand mark of 5000 points.1999
The initial years of the 21st century marked the rise in the IT stocks that pushed the Sensex to 6000. A new record was set in 2004 when the Sensex touched 6026 points. Jan 2004
After Dhirubhai Ambani’s will settlement, the price of the Mukesh Ambani-led Reliance Group of Industries saw a massive rise. It contributed to a sharp increase in the BSE Sensex that reached 7000 points! 2005
Rapid purchasing by Foreign Institutional Investors (FIIs), with the growing interest shown by the domestic institutions, helped the Sensex reach 9000 points within a gap of a few months.June to December 2005
BSE Sensex entered the 10,000 club in 2006. February 2006 
Within just a year, the Sensex grew by another 10,000 points to reach 20,000. 2006 to 2007
The Sensex plummeted in 2008 due to the Global Recession or Financial Crisis. So, the period from 2008 to 2010 marked the stabilisation of the Indian stock market, and the Sensex reached 21000 points on the 5th of November 2010.2008 to 2010
A new high for the Sensex came in 2015 when the Sensex closed at 29,278 points. January 2015
Sensex crossed the 40,000 mark in May 2019, setting a new record. May 2019

The above table shows how the BSE Sensex kept rising and breaking records despite several market fluctuations and financial crises. In 2025, the Sensex has even crossed the 81,000 mark, reflecting the immense faith of investors in the Indian stock market. 

Tips Before You Start Investing in Sensex Stocks

Here are some dos and don’ts you must know before investing in BSE Sensex stocks:

Do’s:

  • Educate Yourself: Always know what you are investing in. Read up on market trends, company performance, and global news.
  • Diversify: Do not just rely on one sector. Spread your investments across multiple industries to balance risk.
  • Set Clear Goals: Are you investing for short-term gains or long-term growth? Knowing your goal keeps you focused.

Don’ts:

  • Avoid Panic Selling: Markets tend to fluctuate. Don’t book losses by panic selling. Read how to overcome fear in stock trading here. 
  • Don’t Follow the Crowd Blindly: Just because a stock is trending doesn’t mean it is right for you.
  • Avoid Ignoring Charges: Know the brokerage and transaction fees, so you are not surprised later.

Final Thoughts

These were some insights on what is Sensex and how its growth reflects the economic boost witnessed by our country. As a smart investor, you must pick the top-performing stock in each category and diversify your investment portfolio. To gain more knowledge about the stock market, you can check the Share.Market platform. 

FAQs

1. What is Sensex in simple terms?

Sensex is the index of the top 30 companies listed on the Bombay Stock Exchange. It shows you how these companies are performing collectively.

2. What is today’s Sensex level?

The BSE Sensex level fluctuates every second of the trading session as per the ongoing market conditions. You can check live updates on the Share.Market platform.

3. Do the companies in the Sensex ever change?

Yes. BSE reviews and updates the list based on performance, liquidity, and other criteria.

4. What are Sensex and Nifty?

Sensex tracks 30 BSE-listed companies, while Nifty covers 50 companies listed on the NSE.