What is Sensex?

The oldest stock exchange in the world is Amsterdam Stock Exchange, which was established in 1602 by Dutch East India Company dealing with the printed stocks and bonds.

The NYSE MKT LLC earlier known as American Stock Exchange (AMEX) was originally New York Curb Exchange until 1953. Because brokers used to trade their things standing by the curb of the New York City.

In India, out of 22124.14 INR billion household savings, only 2% goes as investment into equities. People in India are more inclined to invest their money in gold, banks and in real estate.

The terms “Bear” and “Bull” are thought to be originated from the way of attacking by each animal, with the bull thrusting its horn up in the air, while a bear swiping downwards. Historically, the middleman used to speculate on the future price of the bearskins by selling them which they yet had to receive from the tappers, with the expectation that the price will drop

Historically, on an average the market declines mostly in the month of September. The three leading indicator DJIA (Dow Jones), S&P 500 (Standard and Poor) and NASDAQ have seemed to be performing poorly in this month. One of the reasons for this is that the trading volume declines in summer as the investors take time for vacation and once they return to work, they exit positions they had build up.

The financial bubbles, dot com bubbles we had come across in the stock market aren’t the first things that happened. Way back in 1711, the share prices of South Sea Company collapsed as they were in the midst of a huge bubble.

The financial bubbles, dot com bubbles we had come across in the stock market aren’t the first things that happened. Way back in 1711, the share prices of South Sea Company collapsed as they were in the midst of a huge bubble.

In the year 2006, one third of the all stocks traded in US and European Union was traded through Algorithmic Trading, a trading system heavily reliant on the mathematical formulas and high speed algorithms and computer programming.

by 2008, almost around 80% of trading was being done by algorithms, however due to various regulations the trading volume via algorithms in percentage terms declined after 2008.

The Dow Jones Industrial Average (DJIA), a priced weighted average of 30 significant stocks traded on NYSE and NASDAQ was created by Wall Street Journal editor and Dow Jones & Company cofounder Charles Dow. However, it is named after Dow and one of his associates, Edward Jones.

The highest-volume day on the NYSE (New York Stock Exchange) was on January 4, 2001, when 2,129,445,637 shares traded. The lowest volume was on March 16, 1830, when only 31 shares traded.

Till the year 2000, markets in US, London and Paris were trading on prices which were in fractions and not in decimals. But after year 2000, this changed and all these markets moved to decimals. This made it easier for an average investor to better understand the value of stocks.

The Securities Exchange Commission (SEC) in United States of America (USA) was created in 1934 by the Securities Exchange Act to regulate the securities market, prevent fraud and enforce laws that require companies to provide full disclosure regarding their financial information.

Sensex, otherwise known as the S&P BSE Sensex index, is the benchmark index of the Bombay Stock Exchange (BSE) in India.

Sensex is composed of 30 of the largest and most actively-traded stocks on the BSE, providing an accurate gauge of India's economy. Initially compiled in 1986, the Sensex is the oldest stock index in India.

Analysts and investors use the Sensex to observe the overall growth, development of particular industries, and booms and busts of the Indian economy.

Sensex experienced enormous growth in the first decade of the 21st century, rising from a close of 3,377.28 in 2002 to one of 20,286.99 in 2007.

This reflects India's gross domestic product (GDP) growth since the turn of the century, which ranks as one of the fastest in the world. According to International Monetary

Fund (IMF) estimates, India's GDP grew rapidly between 2002 and 2007, and then stunted a bit in 2008, in stride with the global financial crisis of that year, but was back on a strong  growth rate in 2010.

India’s growing GDP owes much credit to the rise of the Indian middle class, which stood at less than 1 percent of the global middle class in 2000 but is expected to account for 10 percent by 2020

The middle class is an important driver of consumption demand.

The Sensex is calculated based on a free-float capitalization method, which provides a weighting for the effect of a company on the index.

This is a variation of the market cap method, but instead of using a company's outstanding shares,

it uses its float, which is the number of shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by company insiders, which can't be readily sold.

To find the free-float capitalization of a company, first find its market cap, which is the number of outstanding shares multiplied by share price, then multiply its free-float factor.