The Bombay Stock Exchange
The BSE Sensex or Bombay Stock Exchange Sensitive Index or
BSE 30 is a value-weighted index composed of 30 stocks with
the base April 1979 = 100. It consists of the 30 largest
and most actively traded stocks, representative of various
sectors, on the Bombay Stock Exchange. These companies
account for around one-fifth of the market capitalization
of the BSE.
The base value of the sensex is 100 on April 1, 1979, and
the base year of BSE-SENSEX is 1978-79.
At irregular intervals, the Bombay Stock Exchange (BSE)
authorities review and modify its composition to make sure
it reflects current market conditions.
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 BSE Sensex works out to be
18.6% per annum, which translates to roughly 9% per annum
after compensating for inflation.
Here is a timeline on the rise and rise of the Sensex
through Indian stock market history.
1000, July 25, 1990 - On July 25, 1990, the Sensex touched
the four-digit figure for the first time and closed at
1,001 in the wake of a good monsoon and excellent corporate
2000, January 15, 1992 - On January 15, 1992, the Sensex
crossed the 2,000-mark and closed at 2,020 followed by the
liberal economic policy initiatives undertaken by the then
finance minister and current Prime Minister Dr Manmohan
3000, February 29, 1992 - On February 29, 1992, the Sensex
surged past the 3000 mark in the wake of the market-
friendly Budget announced by the then Finance Minister, Dr
4000, March 30, 1992 - On March 30, 1992, the Sensex
crossed the 4,000-mark and closed at 4,091 on the
expectations of a liberal export-import policy. It was then
that the Harshad Mehta scam hit the markets and Sensex
witnessed unabated selling.
5000, October 11, 1999 - On October 8, 1999, the Sensex
crossed the 5,000-mark as the BJP-led coalition won the
majority in the 13th Lok Sabha election.
6000, February 11, 2000 - On February 11, 2000, the
infotech boom helped the Sensex to cross the 6,000-mark and
hit and all time high of 6,006.
7000, June 21, 2005 - On June 20, 2005, the news of the
settlement between the Ambani brothers boosted investor
sentiments and the scrips of RIL, Reliance Energy, Reliance
Capital and IPCL made huge gains. This helped the Sensex
crossed 7,000 points for the first time.
8000, September 8, 2005 - On September 8, 2005, the Bombay
Stock Exchange's benchmark 30-share index -- the Sensex --
crossed the 8000 level following brisk buying by foreign
and domestic funds in early trading.
9000, December 9, 2005 - The Sensex on November 28, 2005
crossed 9000 to touch 9000.32 points during mid-session at
the Bombay Stock Exchange on the back of frantic buying
spree by foreign institutional investors and well supported
by local operators as well as retail investors.
10,000, February 7, 2006 - The Sensex on February 6, 2006
touched 10,003 points during mid-session. The Sensex
finally closed above the 10K-mark on February 7, 2006.
11,000, March 27, 2006 - The Sensex on March 21, 2006
crossed 11,000 and touched a peak of 11,001 points during
mid-session at the Bombay Stock Exchange for the first
time. However, it was on March 27, 2006 that the Sensex
first closed at over 11,000 points.
12,000, April 20, 2006 - The Sensex on April 20, 2006
crossed 12,000 and touched a peak of 12,004 points during
mid-session at the Bombay Stock Exchange for the first
13,000, October 30, 2006 - The Sensex on October 30, 2006
crossed 13,000 and still riding high at the Bombay Stock
Exchange for the first time. It took 135 days to reach
13,000 from 12,000. And 124 days to reach 13,000 from
12,500. On 30 October 2006 it touched a peak of 13,039.36 &
closed at 13,024.26.
14,000, December 5, 2006 - The Sensex on December 5, 2006
crossed 14,000 and touched a peak of 14028 at 9.58AM(IST)
while opening for the day December 5, 2006.
15,000, July 6, 2007- The Sensex on July 6, 2007 crossed
another milestone and reached a magic figure of 15,000. it
took almost 7 month and 1 day to touch such a historic
16,000, September 19, 2007- The Sensex on September 19,
2007 crossed the 16,000 mark and reached a historic peak of
16322 while closing. The bull hits because of the rate cut
of 50 bps in the discount rate by the Fed chief Ben
Bernanke in US.
17,000, September 26, 2007- The Sensex on September 26,
2007 crossed the 17,000 mark for the first time, creating a
record for the second fastest 1000 point gain in just 5
trading sessions. It failed however to sustain the momentum
and closed below 17000. The Sensex closed above 17000 for
the first time on the following day. Reliance group has
been the main contributor in this bull run, contributing
256 points. This also helped Mukesh Ambani's net worth to
grow to over $50 billion or Rs.2 trillion. It was also
during this record bull run that the Sensex for the first
time zoomed ahead of the Nikkei of Japan.
18,000, October 9, 2007- The Sensex crossed the 18k mark
for the first time on October 9, 2007. The journey from 17k
to 18k took just 8 trading sessions which is the third
fastest 1000 point rise in the history of the sensex. The
sensex closed at 18,280 at the end of day. This 788 point
gain on 9 October was the second biggest single day
19,000, October 15, 2007- The Sensex crossed the 19k mark
for the first time on October 15, 2007. It took just 4 days
to reach from 18k to 19k. This is the fastest 1000 points
rally ever and also the 640 point rally was the second
highest single day rally in absolute terms. This made it a
record 3000 point rally in 17 trading sessions overall.
20,000, October 29, 2007- The Sensex crossed the 20k mark
for the first time with a massive 734.5 point gain but
closed below the 20k mark. It took 11 days to reach from
19k to 20k. The journey of the last 10,000 points was
covered in just 869 sessions as against 7,297 sessions
taken to touch the 10,000 mark from 1,000 levels. In 2007
alone, there were six 1,000-point rallies for the Sensex.
21,000, January 8, 2008 Business Standard
Major crashes since 2000
On May 22, 2006, the Sensex plunged by 1100 points during
intra-day trading, leading to the suspension of trading for
the first time since May 17, 2004. The volatility of the
Sensex had caused investors to lose Rs 6 lakh crore ($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,
still 450 points in the red.
The Sensex eventually recovered from the volatility, and on
October 16, 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
Effects of the subprime crisis in the US
On July 23, 2007, the Sensex touched a new high of 15,733
points. On July 27, 2007 the Sensex witnessed a huge
correction 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 August 1, 2007.
Participatory notes issue
On October 16, 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 (October 17, 2007). Within a minute of
opening trade, the Sensex crashed by 1744 points or about
9% of its value - the biggest intra-day fall in Indian
stock markets in absolute terms till then. This led to
automatic suspension of trade for 1 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.
This was, however not the end of the volatility. The next
day (October 18, 2007), the Sensex tumbled by 717.43
points — 3.83 per cent — to 17998.39. The slide continued
the next day when the Sensex fell 438.41 points to settle
at 17559.98 at the end of the week, after touching the
lowest level of that week at 17226.18 during the day.
After detailed clarifications from the SEBI chief M.
Damodaran regarding the new rules, the market made a 879-
point gain on October 23, thus signalling the end of the PN
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
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.
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%.
Companies in the Sensex
List of BSE Sensex companies provides the full list of
companies that have been part of the BSE Sensex since its
inception in 1986 (baselined to 1979).
(as of October 31, 2007)
Housing Related 0.60
500425 Ambuja Cements Ltd
Housing Related 0.65
500490 Bajaj Auto
Transport Equipments 0.65
Capital Goods 0.35
532454 Bharti Airtel
500124 DLF Ltd**
532868 Grasim Industries
500180 HDFC Bank
500440 Hindalco Industries
Metal, Metal Products & Mining 0.70
500696 Hindustan Lever Limited
532174 ICICI Bank
Information Technology 0.85
500875 ITC Limited
500510 Larsen & Toubro
Capital Goods & Construction. 0.90
500520 Mahindra & Mahindra Limited
Transport Equipments 0.80
532500 Maruti Udyog
Transport Equipments 0.45
Oil & Gas 0.20
500359 Ranbaxy Laboratories
532712 Reliance Communications
500390 Reliance Energy
500325 Reliance Industries
Oil & Gas 0.50
500376 Satyam Computer Services
Information Technology 0.95
500112 State Bank of India
Banking & Finance 0.45
532540 Tata Consultancy Services
Information Technology 0.20
500570 Tata Motors
Transport Equipments 0.60
500470 Tata Steel
Metal, Metal Products & Mining 0.70
Information Technology 0.20
.**DLF replaced Dr. Reddy's Lab on 19 November 2007.
The top ten single-day falls of the Sensex has occurred on
the following dates :
1. January 21, 2008 --- 1,408.35 points
2. March 17, 2008 --- 951.03 points
3. January 22, 2008 --- 857 points
4. February 11, 2008 --- 833.98 points
5. May 18, 2006 --- 826 points
6. March 13, 2008 --- 770.63 points
7. December 17, 2007 --- 769.48 points
8. March 31, 2007 --- 726.85 points
9. October 17, 2007 --- 717.43 points
10. January 18, 2007 --- 687.82 points
11. November 21, 2007 --- 678.18 points
12. August 16, 2007 --- 642.70 points
13. April 2, 2007 --- 616.73 points
| Balaji |