WHAT THE FAQ: What is it a big deal that the Sensex hits 60,000? 

When Sensex breached the 60,000 mark, we wondered how it is calculated. In today's FAQ, we try and find out what the Sensex and Nifty are all about and how does it impact our market 
Picture: Edexlive
Picture: Edexlive

On September 24, the Sensex breached the 60,000 mark for the first time ever due to increased business activity between India and other countries. India's measures to support the economy in all ways was another reason why the Sensex breached 60,000 points. 

But what is the big deal over the Sensex hitting 60,000? On March 24, 2020, the Sensex plunged to as low as 25.638, the S&P and BSE Sensex surged 134 per cent in 18 months. In fact, Sensex took nine years to go from 1000-5,000 and also seven years to hit 10,000 points. Now, to gain an additional 35,000 points, it has taken seven years. We try and find out what the Sensex and Nifty are all about and how it is calculated:

What does Sensex point mean?
The Sensex is an indicator of all the major companies of the BSE. If the Sensex climbs up, it means that the prices of the stocks of most of the major companies on the Bombay Stock Exchange have gone up. If the Sensex goes down, it indicates that the stock price of most of the major stocks on the BSE have gone down

What does Nifty stand for?
Nifty stands for National Stock Exchange Fifty and is the equity benchmark index of the National Stock Exchange (NSE). It was introduced by NSE in 1996. These 50 stocks account for nearly 65% of the total free-float market capitalisation of the index.

How is Sensex calculated?
Value of Sensex = (Total free float market capitalisation/ Base market capitalisation) * Base period index value. The base period (year) for Sensex calculation is 1978-79. The base value index is 100. Using the above formula, one can calculate the value of BSE Sensex

How is Nifty calculated?
The Nifty 50 is computed using the free-float market capitalisation weighted method wherein the level of the Index reflects the total market value of all the stocks in the index relative to the base period November 3, 1995.

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