NSE and BSE: The Science of Becoming Rich

The National Stock Exchange of India is a securities exchange in India based in Mumbai. Besides the NSE, the older Bombay Stock Exchange is a stock exchange in Mumbai. Nifty is the leading stock index for the largest companies in the Indian Stock Exchange. The Nifty contains 50 companies from 21 economic sectors in India.

The Nifty gets owned and operated by India Index Services and Products Ltd. IISL which is a joint project of the NSE and CRISIL. The Sensex is the most popular and most important stock index on the Bombay Stock Exchange in India. It lists the 30 largest companies traded on the BSE. It represents approximately 40% of the total market capitalization of the BSE.

The abbreviation Sensex for the financial index began from 1990. The weighting took place for a long time only after market capitalization. From a technical point of view, the index is a price index weighted as per market capitalization. The index is not adjusted for dividend payments.

Capital measures such as equity shares have no (distorting) effect on the index. The composition of the Index gets reviewed every three months. The Sensex gets updated every second during the trading hours from 9:55 am to 3:30 pm local time.

The BSE Sensex was first launched on 1 January 1986 and returned to 1 April 1979 (basis: 100 points). On March 6, 1986, the index suffered the highest daily loss of its history at 13.27 percent. Milestones in the development were 25 July 1990. The Sensex closed the 1,000 point mark for the first time with 1,007.97 points. On 11th of October 1999, the index reaches 5,031.78 points for the first time. By 11 February 2000, it rose to 5,933.56 points.

After the dot-com bubble, the Sensex fell to a low of 2,834.41 points on October 28, 2002. This was a decline since February 2000 by 52.2 percent. 28th October 2002 marked the end of the descent. The economic boom in India led to a rapid rise in the index over the next five years.

On February 7, 2006, the Sensex reach 10,082.28 points for the first time. On December 11, 2007, it reaches 20,290.89 points. By 8 January 2008, the BSE Sensex rose to 20,873.33 points. This was an increase of 636.4 percent since October 2002.

In the course of the US real estate crisis in 2007, the index began to decline again. On 17 March 2008, it closed with 14,809,49 points and on 17 October 2008 with 9,975,35 points. The Sensex reached a new low on March 9, 2009, when it finished trading with 8,160.40 points. This corresponds to a decline since January 8, 2008, of 60.9 percent.

On May 18, 2009, the Sensex achieved the highest daily gain in its history with 17.34 percent. It was the first time that the Indian stock market had to close for a whole day due to a strong price increase.

Since spring 2009, the BSE Sensex has been on its way up again. On 5 November 2010, it marked an all-time high with a final score of 21,004.96 points. This corresponds to an increase of 157.4 percent since March 9. The European crisis and the weakening of the global economy from 2011 led to a slump in the Indian lead index. On 20 December 2011, the BSE Sensex concluded trading at 15.175.08 points. The loss since the peak on 5 November 2010 is 27.8 percent.

On 4 January 2013, the index closed at 19,784.08 points, an increase of 30.4% from 20 December 2011.