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.