3 Replies to “what is sensex?n what points should keep in mind while investing in shares?”

  1. The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks with the base April 1979 = 100. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE.

    The base value of the Sensex is 100 on April 1, 1979 and the base year of BSE-SENSEX is 1978-79.

    At irregular intervals, the Bombay Stock Exchange (BSE) authorities review and modify its composition to make sure it reflects current market conditions.

    The index has increased by over ten times from June 1990 to today. Using information from April 1979 onwards, the long-run rate of return on the BSE Sensex works out to be 18.6% per annum, which translates to roughly 9% per annum after compensating for inflation

    Stocks in sensex are :

    ACC
    Ambuja Cements Ltd
    Bajaj Auto
    BHEL
    Bharti Airtel
    Cipla
    DLF Ltd
    Grasim Industries
    HDFC
    HDFC Bank
    Hindalco Industries
    Hindustan Lever Limited
    ICICI Bank
    Infosys
    ITC Limited
    Larsen & Toubro
    Mahindra & Mahindra Limited
    Maruti Udyog
    NTPC
    ONGC
    Ranbaxy Laboratories
    Reliance Communications
    Reliance Energy
    Reliance Industries
    Satyam Computer Services
    State Bank of India
    Tata Consultancy Services
    Tata Motors
    Tata Steel
    Wipro

    It is always recommended that as new investor always start with Mutual funds and not with direct equity because of the following reasons.
    *professional management of funds in MF by a fund manager..who takes care of yr investment (as u dont know anythin)
    *Diversification : the amount invested will be well diversified which implies the risk is being diversified…
    * low cost: if u invest in direct equity ull incurr more costs like the transaction costs(buying and sellin brokerage) securities holding costs, demat maintenance charges .
    *Tax benefits: u get the best tax benefits investing in Mf coz the dividend i totally tax free in the hands of investor
    Liquidity: u can sell the units of MF when ever u want and get the money
    if u invest in direct equity ull not get all the above said benefits and its really difficult to keep a track of the markets . once u start with MF’s ull have some idea about markets and other instruments then make a decision accordingly.

    Trading in excahnges :
    To transact through any stock exchange…u will have to do it through a broker, normally called as stock broker who is a registered member in that exchange.he opens a Trading account for you( through which you buy or sell the shares) and a demat account( which is the De material account where the shares that u bought will be stored in electronic format..as every thing is computerized now..it just acts like a bank account. u use a bank account to put your money..in the same way u use the demat account to keep your shares). after you open these accounts its simple..you call the broker to buy or sell the shares…he will do it on your behalf.this is the traditional way of doing the trading
    Now you have got the option of opening a online account where you will be doing the transactions yourself(of course it is also opened by a broker and the transactions are routed to him…he is the one who gives you the software to use)
    it will be similar to an email account where u login using your user id and password…after u log in u see a screen..where all the shares are in left hand side and the info like the Last traded price, time, Up n down, Last traded quantity..etc etc will be visible..and u can busy and sell on your choice using . that..its very convenient to us

    While investing in shares, as an individual investor what i suggest is…..we have to watch a particular scrip that interests us a lot…we have to observe its price moments..and make a not of its highs n lows)like life time high , low) when we know that the fundamentals (basic financial aspects like good profits active management..good balance sheet etc) then u can go about picking up that stock as n when there is a correction in the market…never try to take that stock in bulk or at one…try to take a regular quantities like say 50..every time time the market falls….This way u can average the buying price …and on an average the price at which u buy will be very less when compare to the market highs n lows..
    And when it comes to selling..u really need to fix your target..like..if u feel very much bullish about the market..u fix a profit margin for every scrip that u own..like….20% or 30% etc…when once u reach that level…sell the stock again in intervals….
    as n when there is 1-2% hike sell the stock..and when the market is down buy it…
    this way one can maximize the profits….
    Hope this is useful to u…
    Good luck…
    Happy investing…!!!!!!!!!!!!!!!!



  2. The Sensex is an “index”. What is an index? An index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down.

    If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down.

    You need to KNOW some “unforgettable basics” before you enter the world of investing in stocks. The stock market is a field dominated by savvy investors who know the ins-and-outs of the market. For people who are not “on the inside”, the stock market can be a VERY dangerous place. :

    Don’t even consider “tips” that tell you about “hot stocks”. Consider the source: There are many people in the market who put in all their time and effort in promoting certain stocks. They do this because they have their money invested in those stocks. If they can get enough people to buy the stock and they can get the stock price to rise, they will sell the stock for a huge price, the stock price will crash and they will walk off to promote another stock.

    Always use your own brain: It’s extremely important. You must always use your own brain. Relying on the advice of others, no matter how well intentioned it may be, is almost always a complete disaster. Make sure you dig in and really examine the “facts about the companies” before you invest. Ignore press releases which have very little substance, and rely on “hype” to tell the company’s story.

    And finally the most important tip!!!
    Only invest money you can afford to lose!! Sure this is a basic point, but many many people miss it. You should only invest money that you can honestly afford to lose!! Everyone enters into investments with the idea of earning big profits, but in many cases, this never works. (Especially if you are new to investing in the stock market!)

    Please understand that the above tips are tips for beginners. Once you really get into the stock market you do not need to follow these rules anymore. But if you are a new investor, you MUST follow these rules. They are for your own safety.

    Also it would be better if in starting you start by investing in IPOs and Mutual Funds and slowly move into the secondary market.

    Happy investing…





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