Feb 18, 2000|
BSE Sensex set for revamp
The Securities and Exchange Board of India (Sebi) has asked the Bombay Stock Exchange (BSE) to consider revamping the BSE Sensex. The regulator is reported to have pointed out that three stocks - Infosys, Reliance and Hindustan Lever, account for over 40% weightage in the Sensex. This makes the index unrepresentative of the market.
The Sebi's concerns stems from the fact that given the concentration of weightage in select stocks, there is a possibility that artificial movements in the Sensex can be created.
The current rally in the markets is largely driven by infotech, pharma, media and to an extent banking and finance stocks. Among the finance stocks the non-banking finance companies (not in Sensex) have been large gainers in the markets. The weightages of these sectors in the BSE Sensex are as follows:
The Sebi's concern seems justified. There is definitely a need to broad base the Sensex to make it representative of the movements in the markets. The software sector, given this view, should be represented by a larger number of stocks. Moreover, media and finance stocks must also find a place in the Sensex.
A broader based index will help in preventing artificial movements as well as, generally speaking, limit volatility. These results are both acceptable and desirable.
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407