How does SENSEX works?

How does SENSEX works?

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Everybody knows about Sensex, but only a few knows how it works. The BSE SENSEX (Bombay Stock Exchange Sensitive Index),  free-float market capitalization-weighted stock market index of a few companies listed by the Sensex. Sensex is just a sensitive index where if a companies performance or value increases, its value will also be gradually increased. For this, first the company should be registered in the stock exchange board. For the registration, the company should follow certain rules and should also achieve certain percentage of the shares issued by them should be in the hands of public. The company should also have some years of experience in the market.

After being registered the company is provided with points based on their performance. Now the floated shares in the market are purchased by big companies. If there is a demand for their share in the market, their point grows. But if the demand becomes low, then their points fall. The shares can be traded by anyone in the market. Like this many companies get registered. The stock exchange board adds up all the points of the registered companies, and gives the sensex points.

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9:20 PM | 4 comments | Read More

VALUE OF $ INCREASES,RUPPEE FALLS !

VALUE OF $ INCREASES,RUPPEE FALLS !

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How does the value of rupee fall?

The currency in your wallet is always on the move. But do you know as the value of dollar increases, the value of rupee falls?  The foreign exchange rate for conversion of currencies depends on the market scenario and the exchange rate being followed by the countries. Many factors contribute to this fall. "The recent fall in the rupee was mainly due to conditions in the euro zone, plunging stock markets, falling foreign investment inflows and strengthening of the dollar," says Brahmbhatt of Alpari.

The BSE SENSEX (Bombay Stock Exchange Sensitive Index),  free-float market capitalization-weighted stock market index of 30 companies listed by the Sensex. These 30 companies are some of the largest companies and are also representatives of the industrial sectors in the Indian economy. If the Sensex falls or crashes,gradually the value of Indian rupee also falls, which leads to instability in the Indian economy.

 Foreign Institutional Investors (FII) have shifted from the Indian markets during the financial year 2011. The FII’s lead to high influx of dollars into the Indian markets. FII in the developing markets has decreased considerably from 19.2 % in 2010 to 3.8% in the year 2011. As FII’s are taking out their investments from the Indian markets,it has led to increase in demand for the dollars, further leading to a fall in the value of the rupee.

European markets also contribute to the fall of the Indian Rupee. Global economy has become essential due to the European debt crisis. Due to the European debt crisis, foreign investors have considered dollar as a safe haven for their investments in their longer run. This again leads to demand for the dollars and a decrease in value of the rupee.

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9:15 PM | 0 comments | Read More