Till the decade of eighties, there was no scale to measure the ups and downs in the Indian stock market. Then, The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market.
SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media.
The SENSEX was initially calculated based on the ‘Full Market Capitalization’ methodology but was shifted to the free-float methodology with effect from September 1, 2003. The ‘Free-float Market Capitalization’ methodology of index construction is regarded as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology.
The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The SENSEX captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through SENSEX.
Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, SENSEX provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country.
The journey so far:
Here is a timeline of all the major events that shaped the index in the last 11 years
6000 : February 11, 2000 – On February 11, 2000, the information technology 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.
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 time.
13,000 : October 30, 2006 – The SENSEX on October 30, 2006 crossed 13,000 for the first time. It touched a peak of 13,039.36 and finally closed at 13,024.26.
14000 : December 5, 2006 – The SENSEX on December 5, 2006 crossed 14,000.
15,000 : July 6, 2007 – The SENSEX on July 6, 2007 crossed 15,000 mark.
16,000 : September 19, 2007 – The SENSEX on September 19, 2007 crossed the 16,000 mark.
17,000 : September 26, 2007 – The SENSEX on September 26, 2007 crossed the 17,000 mark for the first time.
18,000 : October 9, 2007 – The SENSEX on October 9, 2007 crossed the 18,000 mark for the first time.
19,000 : October 15, 2007 – The SENSEX on October 15, 2007 crossed the 19,000 mark for the first time.
20,000 : October 29, 2007 – The SENSEX on October 29, 2007 crossed the 20,000 mark for the first time.
21,000 : Jan 08, 2008 – The SENSEX on January 8, 2008 touched all time peak of 21078 before closing at 20873.
The SENSEX reached its peak on:
On May 18, 2009, the SENSEX surged 2110.79 points from the previous closing of 12174.42 this leading to the suspension of trade for the whole day.This event created history in Dalal Street, by being the first ever time that trade had been suspended for an increase in value. This rally is primarily due to the victory of the UPA in the 15th General elections. Trading was open for that day only for 55 seconds. Initially 25 seconds and 30 seconds market reached upper freeze limit twice in that day itself.
The SENSEX tanked the most on:
In the third week of January 2008, the SENSEX experienced huge falls along with other markets around the world. On January 21, 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.
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%.