BSE SENSEX

S&P BSE SENSEX
Type Stock Exchange
Location Mumbai, India
CurrencyINR(₹)
Websitewww.bseindia.com

The S&P BSE SENSEX (S&P Bombay Stock Exchange Sensitive Index), also-called the BSE 30 or simply the SENSEX, is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. The 30 component companies which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy. Published since 1 January 1986, the S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the S&P BSE SENSEX is taken as 100 on 1 April 1979, and its base year as 1978–79. On 25 July 2001 BSE launched DOLLEX-30, a dollar-linked version of S&P BSE SENSEX. As of 21 April 2011, the market capitalisation of S&P BSE SENSEX was about INR29733 billion (US$472 billion) (47.68% of market capitalisation of BSE), while its free-float market capitalisation was INR15690 billion (US$249 billion). During 2008-12, Sensex 30 Index share of BSE market capitalisation fell from 49% to 25%[1] due to the rise of sectoral indices like BSE PSU, Bankex, BSE-Teck, etc.

Calculation

The BSE has some reviews and modifies its composition to be sure it reflects current market conditions. The index is calculated based on a free float capitalisation method, a variation of the market capitalisation method. Instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. As per free float capitalisation methodology, the level of index at any point of time reflects the free float market value of 30 component stocks relative to a base period. The market capitalisation of a company is determined by multiplying the price of its stock by the number of shares issued by of corporate actions, replacement of scrips, The index has increased by over ten times from June 1990 to the present. Using information from April 1979 onwards, the long-run rate of return on the S&P BSE SENSEX works out to be 18.6% per annum.

Milestones

Graph of S&P BSE SENSEX monthly data

Here is a timeline on the rise of the SENSEX through Indian stock market history

The SENSEX since 2006

May–December 2006

On 22 May 2006, the SENSEX plunged by 1,100 points during intra-day trading, leading to the suspension of trading for the first time since 17 May 2004. The volatility of the SENSEX had caused investors to lose Rs 6 trillion (US$131 billion) within seven trading sessions. The Finance Minister of India, P. Chidambaram, made an unscheduled press statement when trading was suspended to assure investors that nothing was wrong with the fundamentals of the economy, and advised retail investors to stay invested. When trading resumed after the reassurances of the Reserve Bank of India and the Securities and Exchange Board of India (SEBI), the SENSEX managed to move up 700 points, but still finished the session 457 points in the red.[20]

The SENSEX eventually recovered from the volatility, and on 16 October 2006, the SENSEX closed at an all-time high of 12,928.18 with an intra-day high of 12,953.76. This was a result of increased confidence in the economy and reports that India's manufacturing sector grew by 11.1% in August 2006.

July–September 2007: Effects of the subprime crisis in the U.S.

On 23 July 2007, the SENSEX touched a new high of 15,733 points. On 27 July 2007 the SENSEX witnessed a huge decline because of selling by Foreign Institutional Investors and global cues to come back to 15,160 points by noon. Following global cues and heavy selling in the international markets, the BSE SENSEX fell by 615 points in a single day on 1 August 2007.[21]

October–December 2007: Participatory notes issue

On 16 October 2007, SEBI (Securities & Exchange Board of India) proposed curbs on participatory notes which accounted for roughly 50% of FII investment in 2007. SEBI was not happy with P-notes because it was not possible to know who owned the underlying securities, and hedge funds acting through P-notes might therefore cause volatility in the Indian markets.

However the proposals of SEBI were not clear and this led to a knee-jerk crash when the markets opened on the following day (17 October 2007). Within a minute of opening trade, the SENSEX crashed by 1,744 points or about 9% of its value – the biggest intra-day fall in Indian stock markets in absolute terms till then. This led to the automatic suspension of trade for one hour. Finance Minister P. Chidambaram issued clarifications, in the meantime, that the government was not against FIIs and was not immediately banning PNs. After the market opened at 10:55 am, the index staged a comeback and ended the day at 18715.82, down 336.04 from the last day's close.

However, this would not be the end of the volatility. The next day (18 October 2007), the SENSEX tumbled by 717.43 points – 3.83 per cent – to close at 17,998.39 points. The slide continued the next day (19 October 2007), when the SENSEX fell 438.41 points to settle at 17,559.98 to the end of the week, after touching the lowest level of that week at 17,226.18 during the day.

After detailed clarifications from the SEBI chief M. Damodaran regarding the new rules, the market made an 879-point gain on 23 October, thus signalling the end of the PN crisis.

May 2009-present

On 18 May 2009, the SENSEX surged up 2,110.79 points to close at 14,285.21, from its previous closing of 12,174.42, for its largest single day rally. Less than a month later, on 4 June 2009, the SENSEX would cross the 15,000 mark.

However, the SENSEX remained volatile during the summer of 2009. The SENSEX plunged by 869.65 points on 6 July 2009, the day of Union Budget presentation in Parliament on concerns over high fiscal deficit. This was the biggest Budget-day loss for the index.[2] On 17 August 2009, the SENSEX lost 626.71 points.

Once again, the SENSEX would recover from the volatility. On 7 September 2009, the SENSEX crossed the 16,000 mark, closing at 16,016.32 points. The index would gain 3,000 points over the next 12 months, as the SENSEX crossed the 19,000 mark on 13 September 2010, closing at 19,208.33 points.

Major SENSEX stock market plunges

January 2008

In the third week of January 2008, the SENSEX experienced huge falls along with other markets around the world. On 21 January 2008, the SENSEX saw its highest ever loss of 1,408 points at the end of the session. The SENSEX recovered to close at 17,605.40 after it tumbled to the day's low of 16,963.96, on high volatility as investors panicked following weak global cues amid fears of a recession in the US.

The next day, the BSE SENSEX index went into a free fall. The index hit the lower circuit breaker in barely a minute after the markets opened at 10 am. Trading was suspended for an hour. On reopening at 10.55 am IST, the market saw its biggest intra-day fall when it hit a low of 15,332, down 2,273 points. However, after reassurance from the Finance Minister of India, the market bounced back to close at 16,730 with a loss of 875 points.[23]

Over the course of two days, the BSE SENSEX in India dropped from 19,013 on Monday morning to 16,730 by Tuesday evening or a two-day fall of 13.9%.[23] Less than a month later, on 11 February 2008, the SENSEX lost 833.98 points, when Reliance Power fell below its IPO price in its debut trade after a high-profile public offer.[2]

March 2008

The free fall of the SENSEX accelerated in March 2008. The month started out with the Sensex losing 900.84 points on 3 March 2008, on concerns emanating from growing credit losses in the US. This would be the first of four one-day falls of greater than 700 points during the month. On 13 March 2008, the SENSEX plummeted another 770.63 points on global economic jitters.[2]

The month ended with the SENSEX shedding 726.85 points on 31 March 2008, after heavy selling in blue-chip stocks on global economic fears.

Early 2009

The SENSEX dropped by 749.05 points on 7 January 2009, when the Satyam fraud came to light.[2]

2015

The index crossed the historical mark of 30,000 after repo rate cut announcement by RBI[24]

Major falls

On the following dates, the SENSEX index suffered major single-day falls (of 430 or more points):[25]

  1. 21 January 2008 --- 1,408.35 points
  2. 24 October 2008 --— 1,070.63 points
  3. 17 March 2008 --- 951.03 points
  4. 3 March 2008 --- 900.84 points[2]
  5. 22 January 2008 --- 875 points
  6. 6 July 2009 --- 869.65 points
  7. 6 January 2014 --- 855 points
  8. 6 January 2015 --- 854.86 points
  9. 11 February 2008 --- 833.98 points
  10. 18 May 2006 --- 826 points
  11. 10 October 2008 --- 800.51 points
  12. 13 March 2008 --- 770.63 points
  13. 17 December 2007 --- 769.48 points
  14. 16 August 2013 --- 769.41 points
  15. 7 January 2009 --- 749.05 points
  16. 31 March 2008[2] --- 726.85 points
  17. 6 October 2008 --- 724.62 points
  18. 17 October 2007 --- 717.43 points
  19. 15 September 2008 --- 710.00 points
  20. 22 September 2011 --- 704.00 points
  21. 18 January 2008 --- 687.82 points
  22. 21 November 2007 --- 678.18 points
  23. 26 March 2015 --- 654.25 points[26]
  24. 3 September 2013 --- 651.47 points[27]
  25. 16 August 2007 --- 642.70 points
  26. 17 August 2009 --- 626.71 points
  27. 2 April 2007 --- 617 points[21]
  28. 1 August 2007 --- 615 points
  29. 9 March 2015 --- 604.17 points[28]
  30. 27 June 2008 --- 600.00 points
  31. 27 Aug 2013 --- 590.05 points[29]
  32. 28 April 1992 --- 570 points[20]
  33. 17 May 2004 --- 565 points[20]
  34. 24 February 2011 --- 545.92 points
  35. 16 December 2014 --- 538.12 points[30]
  36. 20 June 2013 --- 526.41 points[31]
  37. 8 July 2014 --- 517.97 points[32]
  38. 30 January 2015 --- 498.82 points[33]
  39. 9 February 2015 --- 490.52 points[34]
  40. 27 February 2012 --- 477.82 points
  41. 15 May 2006 --- 463 points[20]
  42. 22 May 2006 --- 457 points
  43. 31 May 2013 --- 455.10 points
  44. 18 Nov 2013 --- 451.32 points
  45. 19 May 2006 --- 453 points[20]
  46. 6 August 2013 --- 449.22 points[35]
  47. 16 November 2010 --- 444.55 points
  48. 4 February 2011 --- 441.92 points
  49. 12 November 2010 --- 432 points
  50. 13 May 2013 --- 430.65 points[36]

References

  1. "Securities and Exchange Board of India Report" (PDF). Sebi.gov.in. Retrieved 18 February 2015.
  2. 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 "Ups and Downs of Sensex". bemoneyaware.com. Retrieved 21 May 2013.
  3. "Funds Hope to Ride on the Boom". ArabNews. Retrieved 14 June 2013.
  4. "Sensex at 9k, bulls on Cloud 9 - Money - DNA". Dnaindia.com. Retrieved 14 June 2013.
  5. "Sensex hits 21,000; ends up 61 points – Rediff.com Business". In.rediff.com. 8 January 2008. Retrieved 19 September 2011.
  6. "Sensex closes above 21,000 level in Diwali Muhurat trade - Money - DNA". Dnaindia.com. Retrieved 14 June 2013.
  7. "Sensex ends at record high of 21,033.97, up 105 points | Latest News & Updates at Daily News & Analysis". Dnaindia.com. 2013-10-30. Retrieved 2015-02-18.
  8. Vyas Mohan (19 February 2013). "Sensex to carry S&P tag". Livemint. Retrieved 14 June 2013.
  9. "Stable govt hope pushes Sensex to life-time high | Business Line". Thehindubusinessline.com. Retrieved 2015-02-18.
  10. "Sensex, Nifty attain record closing high | Business Standard News". Business-standard.com. 2014-03-26. Retrieved 2015-02-18.
  11. "Sensex at new record high, Nifty breaches 7,000 mark". The Hindu. 2014-05-12. Retrieved 2015-02-18.
  12. "Sensex hits new record high of 23,922". The Hindu. 2014-05-13. Retrieved 2015-02-18.
  13. "Stock markets: BSE Sensex rallies to record high on Narendra Modi election 2014 win". The Indian Express. 2014-05-16. Retrieved 2015-02-18.
  14. "BSE Sensex closes above 25,000-level for the first time - Business Today". Businesstoday.intoday.in. 2014-06-05. Retrieved 2015-02-18.
  15. "Sensex surges 138 points on hopes of business-friendly Budget | Business Line". Thehindubusinessline.com. Retrieved 2015-02-18.
  16. "Sensex ends above 27000, heavyweights lead show; cements up". Moneycontrol.com. Retrieved 2015-02-18.
  17. 17.0 17.1 "BSE Sensex breaches 28,000-mark; Nifty at 8,363.65". The Indian Express. 2014-11-05. Retrieved 2015-02-18.
  18. "Sensex ends above 28000 for 1st time; Tata Steel slips 2%". Moneycontrol.com. Retrieved 2015-02-18.
  19. "Sensex hits fresh peak of 29,278, Nifty hits 8,835". Indiatvnews.com. Retrieved 2015-02-18.
  20. 20.0 20.1 20.2 20.3 20.4 "The 10 Biggest Falls in Sensex History as of 2006". rediff.com. Retrieved 21 May 2013.
  21. 21.0 21.1 "The 10 Biggest Falls in Sensex History as of October 2008". rediff.com. Retrieved 21 May 2013.
  22. "Article: MARKET WATCH: Sensex @ 10K: up in 483 days, down in 193. | AccessMyLibrary - Promoting library advocacy". AccessMyLibrary. Retrieved 14 June 2013.
  23. 23.0 23.1 rediff Business Bureau (21 January 2008). "The 10 biggest falls in SENSEX history". MarketWatch. Archived from the original on 27 January 2008. Retrieved 23 January 2008.
  24. http://profit.ndtv.com/budget/rajan-backs-jaitley-on-growth-cuts-repo-rate-sensex-hits-30-000-744111
  25. "The Hindu News Update Service". Chennai, India: Hindu.com. 22 January 2008. Retrieved 19 September 2011.
  26. http://economictimes.indiatimes.com/markets/stocks/news/top-five-reasons-sensex-fell-below-27500/articleshow/46698449.cms
  27. "Sensex slumps 651 points on geopolitical worries". Reuters. 3 September 2013.
  28. http://businesstoday.intoday.in/story/stock-market-bse-sensex-nse-nifty-today-march-9-2015/1/216673.html
  29. "Re, Sensex sink on fears Food Bill will feed deficit | Business Line". Thehindubusinessline.com. Retrieved 2015-02-18.
  30. "Sensex sheds 538 points amid global market sell-off". Livemint. Retrieved 2015-02-18.
  31. "Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire". Myiris.com. Retrieved 2015-02-18.
  32. "BSE Sensex plummets 518 pts, marks biggest single-day fall in over 10 months". The Indian Express. Retrieved 2015-02-18.
  33. http://www.rediff.com/business/report/how-the-markets-fared-on-jan-30/20150130.htm
  34. http://businesstoday.intoday.in/story/stock-market-bse-sensex-nse-nifty-february-9-2015/1/215511.html
  35. "Sensex plunges 450 points, Nifty slips way below 5,600". The Times Of India. 6 August 2013.
  36. "Just 6 stocks caused half of Sensex's 430-point fall - Money - DNA". Dnaindia.com. Retrieved 3 September 2013.

External links