The usual method is to use an optical sensor of some sort, either an optical interruptor or a reflection sensor. Without any idea of what your spindle looks like, what would suit your machine is hard to guess.
Look up 'photo interruptor' on the RS Components web site
RS Australia | World Leading Distributor of Electronics, Electromechanical and Industrial Components .
Basically, a light beam with a flag going through it. The 'flag' is usually a thin disk on the spindle, with a slot cut out.
Cheers
Roger