How a single portmanteau became the pulse of the Indian economy
In short: In 1989, a market analyst combined two words to create a name that would define a nation's financial health. Today, the S&P BSE SENSEX tracks 30 industrial giants, acting as a barometer for India's economic shifts, from monsoon-driven surges to massive political transitions.
The SENSEX, a portmanteau of 'Sensitive' and 'Index', was coined in 1989 by analyst Deepak Mohoni. While the index has been published since 1 January 1986, its historical foundation traces back to a base value of 100 established on 1 April 1979. It functions as a free-float market-weighted index, meaning it tracks the value of shares readily available for trading, specifically excluding holdings such as those owned by directors.
The index's trajectory has been inextricably linked to India's political and economic milestones. In the early 1990s, the index surged following liberal economic policies led by Finance Minister Dr. Manmohan Singh and Prime Minister PV Narasimha Rao. However, this era also saw volatility, such as the market-wide selling triggered by the Harshad Mehta scam in 1992. Later, the index reached new heights following the 13th Lok Sabha election victory by the BJP-led coalition in 1999.
The mechanics of the index are periodically updated to ensure it reflects current market conditions. It currently comprises 30 well-established, financially sound companies representing various industrial sectors [S1:cap]. From its 1990s beginnings, the index has increased by over twenty-five times, maintaining a long-run rate of return of approximately 18.6% per annum since 1979. This growth reflects broader shifts, including the IT boom of 2000 and the massive influx of foreign institutional investors in the mid-2000s.
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Sources
- Summary by Intellect · source: BSE SENSEX
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