is sensex correct indicator of economy?

Answer 1

It is more an indicator of speculation by investors than anything else. Although there is a weak corrolation between the economy and the Sensex.

Answer 2

Not really. The Sensex is just based on the top 30 stocks traded on the BSE. It was at 4000 levels in May 2004, it's at 13000 now. The economy has not "tripled" in any way in two years.

The sensex is more a reflection of "sentiment" and potential future growth of certain parts of the economy, but not all. For instance it was nearly 10 years after liberalisation that an IT stock got included in the Sensex!

The Sensex and the macro economy have some elements in common, but what is good for one may not be good for the other. For instance, rising inflation is very good for the Sensex because it means high corporate growth rates, but it's bad for the economy.

Answer 3

The Index of Leading Indicators is an Indian economic index intended to estimate future economic activity. It is calculated by The Conference Board, a non-governmental organization, which determines the value of the index from the values of ten key variables. These variables have historically turned downward before a recession and upward before an expansion. The single index value composed from these ten variables has generally proved capable of predicting recessions over the past 50 years. Those who have an activist view believe in discretionary monetary and fiscal policy. They believe that the index of leading indicators can provide an early warning system so that policymakers can shift toward macroeconomic stimulus when the index fails.

One problem with the index of leading indicators is that the time lag between the signal of a recession and the actual recession has varied widely. Also, on a few occasions, the index of leading indicators has fallen, and no recession occured. That is, the index has given a few false alarms. Hence, policymakers must react carefully to the changes in the index.

The 10 components of the Index include:

1. Average weekly hours worked by manufacturing workers
2. Average number of initial applications for unemployment insurance
3. Number of manufacturers' new orders for consumer goods and materials
4. Speed of delivery of new merchandise to vendors from suppliers
5. Amount of new orders for capital goods unrelated to defense
6. Amount of new building permits for residential buildings
7. The BSE Sensex and NSE S&P CNX Nifty stock index
8. Inflation-adjusted monetary supply (M2)
9. Spread between long and short interest rates (the yield curve)
10. Consumer sentiment

While this index correctly forecasted each of the 7 recessions during the 1959-2001 period it also has forecast 5 recessions that did not occur.

Answer 4

Who says that?. SENSEX is one of the vital mirror of our economy,but easily manipulated by person/entity etc etc...
GDP growth is another parameter of our economy but it can also be manipulate by misleading data.
The strong measurement is advance tax collection figure from industry and loan repayment figure from agriculture.
But the superior measurement is annual budget deficit figure.

Answer 5

The sensex by myself isn't a indicator of economic equipment. yet definite, it is likewise between the indicator of economic equipment. it somewhat is the illustration of ways Indian companies are doing. the companies share fee will variety in accordance with their overall performance. The overall performance will variety counting on the economic equipment.

Answer 6

sensex is 30 share index of bse

Answer 7

yes becouse all listed company qouted with NSE,BSE Etc.

Sensex is based on NSE,BSE Data. hence Sensex coorect.

Answer 8

No it shows only industrial development.. Real indicators are GDP and per capita income.
Earn more than 20000.00 a month
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Answer 9

yes because each and every actions happening in the country will have impact on the share market

Answer 10

NOT ACTUALLY
SENSEX IS A CORRECT INDICATOR OF LISTED COMPANIES OF ECONOMY NOT OF SECTORS LIKE FARMING etc.