Bombay Stock Exchange: What It Is And How It Works (2024)

Frequently Asked Questions (FAQs)

Bombay Stock Exchange, S&P BSE Indices, Sensex – What is it?

Established in 1875 in Dalal Street of Mumbai, BSE Limited (formerly, Bombay Stock Exchange) is the oldest stock exchange in Asia. The stock exchange provides investors a trading platform to purchase and sell equity and fixed-income securities or shares of companies listed on the stock exchange.

Like Nifty Indices used by its peer National Stock Exchange (NSE), BSE uses S&P BSE Indices to track benchmark performance of shares of companies listed on the exchange. There are over 85 S&P BSE indices whose job is to read movements of the stock market using the weighted average and market capitalization of companies representing different sectors of the economy.

The S&P BSE Sensex, like NIFTY 50 of NSE, is the most referred index used by the BSE to track how the stock market is performing. It consists of 30 selected actively traded stocks of companies listed at BSE. Overall, S&P BSE indices are calculated using free-float market capitalization method, helpful for benchmarking fund portfolios, launching of index funds, exchange traded funds (ETFs), and other trading options.

Let’s take a closer look at classification of S&P BSE indices and what they mean.

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Types of S&P BSE Indices and What They Mean

S&P Dow Jones Indices and the BSE Limited have a strategic partnership to calculate, disseminate, and license a suite of BSE indices — hence, called S&P BSE Indices. These indices are used to track benchmark performance of equity and fixed-income market securities.

Equity market indices include BSE Sensex market capitalization broad Indices, sector and industry, thematics, strategy, sustainability, and volatility indices. Similarly, BSE uses composite, government, corporate and money market indices to track fixed-income markets.

Here’s what they mean.

BSE Sensex Market Cap/Broad Indices

The broad-based indices cover large-cap, mid-cap, and small-cap companies. There are 23 BSE Sensex market cap broad indices as of Mar. 31, 2023, which act as market indicators for the Indian stock market. Some broad-based indices include the following:


S&P BSE SENSEX	Used as a benchmark and an investable index that represents the overall equity market, comprising 30 large companies across key sectors.
S&P BSE 100	Measures performance of top-100 large and most liquid Indian companies within the S&P BSE LargeMidCap index.
S&P BSE SENSEX 50	The index is used to measure performance of top-50 large and most liquid companies within S&P BSE 100 index.
S&P BSE SENSEX Next 50	50 companies within S&P BSE 100 index, which are not members of the S&P BSE SENSEX 50 index, are measured.
S&P BSE SENSEX 50 TMC	The index measures the performance of 50 of the largest and most liquid companies within the S&P BSE 100 LargeCap TMC.

BSE Sensex Sector & Industry Indices

Sectoral indices serve as a benchmark for measuring the performance of stocks of companies representing several broadly defined economic sectors. The indices include companies in the S&P BSE 500 index that represent nine sectors of the economy and contain a minimum of 10 companies per index.

Currently, there are 20 S&P BSE sectoral indices, including:


S&P BSE Commodities	Used to measure the performance of companies that represent the basic materials sector.
S&P BSE Consumer Discretionary	Used to measure the performance of companies that are members of the consumer discretionary goods and services sector.
S&P BSE Energy	Measures the performance of companies that represent the energy sector.
S&P BSE Auto	Measure the performance of companies representing the transportation equipment sector as defined by the BSE industry classification system.
S&P BSE Financial Services	The index is used to measure shares of companies that are classified as members of the finance sector.

BSE Thematic Indices

Thematic indices is another calculation method used by the S&P BSE to measure the performance of companies that represent a movement in a specific theme. Currently, there are nine thematic indices managed by S&P BSE, including:


S&P BSE PSU	The S&P BSE PSU index measures performance of public sector undertakings (PSUs).
S&P BSE CPSE	The index measures the performance of Central Public Sector Enterprises (CPSEs) listed at BSE.
S&P BSE Bharat 22 Index	Designed to measure the performance of select companies disinvested by the Central Government where index constituents are weighted by their float-adjusted market capitalization.

BSE Strategy Indices

Similarly, strategy-based investment indices managed by S&P BSE include:


S&P BSE IPO	The index tracks the performance of stocks listed via initial public offerings (IPOs), over a one-year period from their listing date.
S&P BSE SME IPO	Tracks performance of small and medium enterprises (SMEs) listed via IPOs on BSE’s SME Platform.
S&P BSE SENSEX Futures Index	Reflects the returns through an investment in the near-month futures contract on the S&P BSE Sensex.
S&P BSE Arbitrage Rate Index	Consists of a 100% long index weight in the S&P BSE Sensex Total Return Index and a 100% short index weight in the S&P BSE Sensex Futures Excess Return Index.

BSE Sustainability Indices

Such indices measure securities of companies that meet sustainability investment criteria, commitment to mitigating risks arising from climate change, as well as performance of the top 25 “green” companies listed at BSE.


S&P BSE 100 ESG Index	The S&P BSE 100 ESG Index measures securities that meet sustainability investing criteria.
S&P BSE CARBONEX	The index tracks the performance of companies within the S&P BSE 100 index based on their commitment to mitigating risks arising from climate change.
S&P BSE GREENEX	The S&P BSE Greenex measures performance of the top 25 “green” companies in terms of greenhouse gas (GHG) emissions, market cap and liquidity.

BSE Volatility Indices

Realized Volatility indices measure the historic volatility of the S&P BSE Sensex.


S&P BSE SENSEX 1-Month Real Vol	The S&P BSE SENSEX 1-Month Realized Volatility index provides market participants with accurate measures of the historic volatility of the S&P BSE SENSEX index over a one-month time horizon.
S&P BSE SENSEX 2-Month Real Vol	The S&P BSE SENSEX 2-Month Realized Volatility index provides market participants with accurate measures of the historic volatility of the S&P BSE SENSEX over a two-month time horizon.
S&P BSE SENSEX 3-Month Real Vol	The S&P BSE SENSEX 2-Month Realized Volatility index provides market participants with accurate measures of the historic volatility of the S&P BSE SENSEX over a three-month time horizon.

BSE Composite Indices

There is currently one composite index.


S&P BSE India Bond Index	The index tracks the performance of local-currency denominated government and corporate bonds from India.

BSE Government Indices

Such indices are designed to track the performance of local-currency denominated sovereign and government bonds as well as government bills, etc.


S&P BSE India 10 Year Sovereign Bond	The index measures the performance of the 10-year Indian sovereign bond.
S&P BSE India Government Bond Index	The index tracks the performance of local-currency denominated government bonds from India.
S&P BSE India Sovereign Bond Index	The index tracks the performance of local-currency denominated sovereign bonds from India.
S&P BSE India Government Bill Index	The S&P BSE India Government Bill Index tracks the performance of local-currency denominated government bills from India.
S&P BSE India Agency Bond Index	The index tracks the performance of local-currency denominated agency bonds from India.

BSE Corporate Indices

Such indices are designed to track the performance of local-currency denominated bonds of companies representing corporate, financials, services, utilities, and industrial sectors.


S&P BSE India Corporate Bond Index	The S&P BSE India Corporate Bond Index is designed to track the performance of local-currency denominated corporate bonds from India.
S&P BSE India Financials Bond Index	The S&P BSE India Financials Bond Index is designed to track the performance of local-currency denominated financial bonds from India.

BSE Money Market Indices


S&P BSE Liquid Rate Index	The S&P BSE Liquid Rate index measures the returns from a daily rolling deposit at the Tri-Party Repo (TREP) rate.

Related: India Stock Market News March 2023

What is the S&P BSE Sensex Index?

S&P BSE Sensex is an index with 30 companies selected from the S&P BSE 100 index listed at BSE. Stocks are either large-cap or mega cap, where the company’s main revenue is derived from its main activities.

The value of S&P BSE Sensex is calculated on the basis of free float market capitalization method. The index measures market movements based on which investors make trading decisions.

The performance of S&P BSE Sensex helps investors understand how the overall equity market is performing. When there are more buyers of stocks, the reading in the S&P BSE Sensex chart goes up representing the cost of shares, and more sellers reduces the price and the reading goes down.

Similar to S&P BSE Sensex is the NIFTY 50 index used by the NSE that tracks performance of 50 large and liquid stocks, using weighted average and market capitalization calculation methods.

Helpful Resources

What Is Sensex And How To Invest In It In March 2023?

What Is Nifty, Types Of Indices, And What They Mean

How to Invest In Share Market: How To Buy Stocks Easily

Frequently Asked Questions (FAQs)

What are different types of S&P BSE indices?

S&P Dow Jones Indices and the BSE Limited have a strategic partnership to calculate, disseminate, and license a suite of BSE indices — hence called, S&P BSE Indices. Equity market indices include BSE Sensex market capitalization broad Indices, sector and industry, thematics, strategy, sustainability, and volatility indices. Similarly, BSE uses composite, government, corporate and money market indices to track fixed-income markets.

What is the function of BSE Sensex market cap/broad indices?

The broad-based indices cover large-cap, mid-cap, and small-cap companies and includes indices such as S&P BSE SENSEX, S&P BSE 100, S&P BSE SENSEX 50, among other key indices.

What is S&P BSE Sensex index?

What is the difference between thematic and strategy indices?

Thematic indices is a calculation method used by the BSE to measure the performance of companies that represent a movement in a specific theme. Similarly, BSE strategy indices track the performance of a portfolio of stocks based on a combination of factors.