Question 1

What is the BSE Sensex?

Accepted Answer

The BSE Sensex, also known as the Bombay Stock Exchange Sensitive Index, is one of Indias most prominent equity benchmarks. Since its inception in 1986, the Sensex has become one of the trusted indicators for investors, reflecting the collective performance and sentiment of the nations largest corporations.

Question 2

How is the BSE Sensex index calculated?

Accepted Answer

The BSE Sensex is calculated using the free float market capitalization method. It represents 30 of the largest and most actively traded stocks on the Bombay Stock Exchange. Each stocks weight in the index is proportional to its free float market cap, and the index value reflects the combined performance of these companies.

Question 3

How to invest in Tata BSE Sensex Index Fund?

Accepted Answer

You can invest in the Tata BSE Sensex Index Fund through Tata Mutual Fund website and app, or with the help of financial advisors. Investments can be made as a lump sum or through a Systematic Investment Plan (SIP). The process involves submitting basic KYC documents and selecting the desired investment amount and mode.

Question 4

How often does the BSE Sensex get reviewed and updated?

Accepted Answer

The BSE Sensex is typically reviewed semi annually, but there may be additional reviews if warranted. The index committee evaluates stocks for inclusion or exclusion based on market capitalization, liquidity, and other eligibility criteria.

Question 5

What is the benchmark of Tata BSE Sensex Index Fund and how closely does it track it?

Accepted Answer

The benchmark for the Tata BSE Sensex Index Fund is the BSE Sensex itself. The fund aims to replicate the performance of the index as closely as possible, subject to tracking error, which can arise due to expenses, cash holdings, and the timing of trades.

Question 6

What is the difference between investing directly in Sensex stocks vs through an index fund?

Accepted Answer

Investing directly means buying individual stocks, requiring active management and monitoring. With an index fund, you invest in all Sensex stocks as a basket, managed by professionals, offering simplicity. Index funds usually involve lower costs compared to active stock picking.

Question 7

What is the minimum investment required for SIP and lump sum in Tata BSE Sensex Index Fund?

Accepted Answer

The minimum investment for the Tata BSE Sensex Index Fund is Rs.150 for SIPs and Rs.5,000 for lump sums. Be sure to refer to the scheme related documents for latest requirements.

Question 8

Who can invest in Tata BSE Sensex Index Fund?

Accepted Answer

Any resident individual, non resident Indian, company, trust, or institution meeting the funds KYC requirements can invest. There are no specific restrictions apart from regulatory and legal eligibility criteria.

Question 9

What are the risks of investing in a Sensex index fund?

Accepted Answer

Risks include market volatility and concentration risk as the fund invests in only 30 companies. The value of the index fund can fluctuate according to the movements of the underlying stocks.

Question 10

What are the tax implications for investing in a Sensex index fund in India?

Accepted Answer

Equity mutual funds, including Sensex index funds, attract capital gains tax. Short term capital gains (for units held less than 12 months) are taxed at 15%, while long term capital gains (for units held more than 12 months) are tax free up to Rs.1.25 lakh per financial year, gains above this threshold are taxed at 10% without indexation for any transfer which takes place before 23 July 2024.

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