Sensex - what does it mean
The market has been gyrating between 16000 to 18000 for quite some time and depending on who are you speaking to it can either go upto 25000 in next 18 months or do down to 12000 in the same period. I have been wondering for quite sometime, what does sensex really means. As far I am concerned it is index based on 30 companies drawn from various industry. Well, they have tried to make sure weightages from various industry correspends to their weighatges in economy. It is also implicitly assumes that if particular industry has to grow dominant company (sensex representative company) in that industry also has to grow. It assume we can't have an industry growth driven by many smaller players, consolidation is the name of the game. As far I am concerned, I think value of Sensex is immaterial for investors. Investors are the business owners and should look at the potential growth of the companies they are owning vis-a-vis price they are paying. As long as they don't get carried away...