is Sensex the true barometer of the economy?

Answer 1

To a great extent it is the policies of the government which reflect on the sensex.
Ultimately it is the performance of the bluechip companies which actually results in the rise or fall.

Answer 2

Actually, this is an interesting question. I have only limited familiarity with the Sensex, but I do have familiarity with stock markets. To say that it is a true barometer might be giving it a little too much credit, but it is a barometer indeed. In fact it is a leading indicator of economic health. Investors in the stock market generally lead other economic indicators. In other words if stocks begin to fall in price, that is a sign that serious economic conditions might very well be around the corner. On the other hand in the depths of a recession, if the stock market begins to rise, then better economic conditions might very well be coming up.

Answer 3

Unfortunately P. Chidambaram and several other Finance Ministers / economists think so. I strongly disagree with that notion. Sensex is an indicator of the financial health of the economy. But often it is manipulated to give an untrue picture. The aim is to boost the stock prices of certain corporations through stock market manipulations. Unscrupulous profiteers jack up stock prices to earn huge profits leading to losses for the small investors.

Answer 4

sensex is just a number derived by calculating the values of certain blue chip shares in a predecided manner & the base value suggests the future value. so if ur base value is high ur sensex will be high , but i necessarily doesnt hold true that ur economy will also be great.

e.g. NSE is a larger stock exchange with more than 4 times the volumes of BSE, but the latter has a bigger value.
similarly dowjones of USA is at 13000 something although the US economy is 4 times larger than indian economy.

even the change in index is also not a true indicator as it only indicates rises in prices of shares of blue chip companies & not all other companies.

Answer 5

As sex , or the size of sexual organ, is not a true yardstick to overall health, sensex is NOT a true barometer of the economy.

Answer 6

accordimg to me sensex is an indicator of ups and down of economy rather than indicator of the health of the economy.

Answer 7

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Answer 8

Not at all. It is partly the barometer of height of speculators in the stock market.

Answer 9

daily sensex not. it is depending demand. but one years perfomance is the borometer

Answer 10

actually we believe that sensex reflects the country's economic strength.