Inferring from Seven BSE Indices ~ Sensex 30 ~ BSE 100 ~ BSE 200 ~ BSE 500 ~ Midcap ~ Smallcap ~ BSE IPO

Inferring from Seven BSE Indices ~ Sensex 30 ~ BSE 100 ~ BSE 200 ~ BSE 500 ~ Midcap ~ Smallcap ~ BSE IPO

Scrip Standpoint ~ Inferring from the BSE Indices

Observations and Comments are given below but for a detailed historical data table of seven BSE Indices over the years including our beloved Sensex,please do visit

Scrip Standpoint ~ Inferring from the Indices on www.jsalphaa.com at Inferring from the BSE Indices ~ 11-Jan-2013

  1. Sensex 30 & BSE 100 have given similar CAGR of @ 14.4 % in 22 years
  2. Wider Index BSE 200 has given lower CAGR of 12% over 21 years
  3. More Comprehensive BSE 500 has given lower CAGR of 11.8% in 13 Years
  4. Small Cap and Midcap Indices have given similar 13% CAGR over 9 years
  5. IPO Index has been a poor performer at CAGR of 7% in 8 Years

Four Major Inferences one can draw from the above Performance of the Indices are

  • From 1 above we realise that Sensex Investing has given us higher returns over time than from Safe Fixed Returns Avenues like Bank Deposits
  • From 1 to 3 above we can infer that Concentrated Large Cap Investments have performed better than Diversified Investments
  • From 4 above we can assume that it made little difference whether one invested in small cap or mid cap
  • 5 above points to either IPO Overpricing or Poor Quality of IPOs that underperformed on bourses or both ~ Companies taking advantage of Bull Markets & Gullible Public

Also from the Sensex Historical Data of the high PE and PBVs highlighted in Bold Red we can observe how expensive the Market was in 1992 (Harshad Mehta Scam Year) to 1995 ( IPO Pricing Scams) and then yet again in 2000 (Ketan Parekh ICE or TMT Era Scams),2007 (pre Lehman Collapse Year) and 2010.

Sensex Highs of 21207 highlighted in Danger Level Bold Red was reached in January 2008 before the Lehman collapse shook the World later in the year and even took our Sensex down to a Superb Investment Level highlighted in Bold Green of 7697 in end October 2008 and 8047 in March 2009

At current levels of 19700+ the Sensex is not really expensive but given the macro headwinds we have reservations on the PE Multiple being rerated significantly but it is clearly indicated that in 2013 the Sensex will record a new high surpassing the earlier High of 21207 of January 2010 ~ whether it can sustain and move ahead from there is the real question

With Corporate Earnings on the upswing and Interest Rate Cut indicated in the short term and continuing high level of FII Inflows ,there is a good probability that the Sensex will sustain at higher levels in 2013 despite the overhanging threat from the usual dampeners of High Inflation,High Budget Deficits,geo political turbulence and implementation of economic reforms

We have seen that over a period of time a Concentrated Equity Portfolio that consists of few selections,on both top down and bottom up approach, spread over small to large cap and across sectors has outperformed the Sensex or any other Index Benchmark

This is our Endeavour ~ with our Expertise and Experience ,to position your Portfolio with Concentrated Fundamental Selections,at times suggesting tactical strategy to increase weightage in one or two selections for the short term,to outperform benchmark Indices over a period of time

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