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Sensex and Nifty Record Highs

01.12.2025

Sensex and Nifty Record Highs

Context

India’s benchmark indices Sensex and Nifty are touching fresh record highs. The uptrend is led mainly by a small group of large-cap heavyweights, particularly major banks and Reliance Industries. This has triggered concerns about market concentration and weak overall market breadth.

 

About the Indices

1. BSE Sensex

  • Exchange: Bombay Stock Exchange (BSE)
     
  • Composition: 30 established, financially strong companies from key sectors.
     
  • Base Year & Base Value: 1978–79, Base Value 100.
     
  • Calculation: Free-Float Market Capitalisation method (weights depend only on publicly tradable shares).
     
  • Role: India’s oldest and most tracked index, representing market performance on the BSE.
     

 

2. Nifty 50

  • Exchange: National Stock Exchange (NSE)
     
  • Composition: 50 largest and most liquid companies across major sectors.
     
  • Base Date & Base Value: 3 November 1995, Base Value 1000.
     
  • Calculation: Free-Float Market Capitalisation method.
     
  • Role: A broad indicator of the Indian equity market, covering diversified sectors and companies.
     

 

Stock Exchanges: BSE and NSE

Exchange

Full Name

Established

Key Features

BSE

Bombay Stock Exchange

1875

Asia’s oldest stock exchange; moved from open-cry to electronic trading with BOLT in 1995.

NSE

National Stock Exchange

1992 (Incorporated)

India’s first nationwide, fully electronic exchange; introduced modern screen-based, order-driven trading in 1994.

 

Key Drivers and Concerns of the Current Rally

Drivers of the Surge

  • Global Sentiment: Expectations of a possible US Federal Reserve rate cut have improved global risk appetite, increasing FII interest in Indian markets.
     
  • Lower Crude Oil Prices: Softening oil prices reduce India’s import burden, ease inflationary pressure, and strengthen corporate profitability.
     
  • Earnings Outlook: Corporate earnings appear to be stabilising, with prospects of double-digit growth in the upcoming financial years.
     
  • Domestic Flows: Strong investments from DIIs and steady inflows into mutual funds continue to support markets.
     

 

Market Concentration Concerns

  • Narrow Leadership: The market’s record highs are being driven by a small set of heavyweight stocks, creating a skewed index performance.
     
  • Weak Breadth: Many mid-cap and small-cap stocks remain far below their peaks, despite the Sensex and Nifty hitting all-time highs.
     
  • Retail Impact: Retail investors holding overpriced mid-cap and small-cap stocks are experiencing losses, even as headline indices rise, highlighting concentration risk and a divergence between index levels and broader market health.
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