BSE Broad and Sectoral Indices Market Cap
(A new blog post is available here with an update of the information as of 31Dec2021)
How have the market capitalisations of stock indices of BSE Limited changed this year? Let us examine the data and see what we can find from it.
Table 1: Market Capitalisation of BSE Broad and Sectoral Indices as on 30Sep2021:
Broad Indices
Since the start of 2021, market cap of all BSE listed firms has grown by 38 per cent to Rs 259.87 lakh crore. Market caps of BSE Small cap, BSE Mid cap, Sensex and BSE AllCap indices have risen by 58, 40, 25 and 39 per cent respectively year-to-date.
It is worth noting that the 39 per cent increase in BSE AllCap index is in line with the 38 per cent rise in market cap of all BSE listed firms--as the market cap of BSE AllCap represents 96.8 per cent of total market cap of all BSE listed companies (data in Table 1 above).
As on date, BSE AllCap index has 906 stocks, whereas the total number of all BSE listed companies is more than 4,000.
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Sensex and BSE 500 accounted for 48.8 and 94.1 per cent respectively of total BSE market cap as on 31Dec2020. But as the BSE mid- and small-cap stocks have delivered superior returns compared to Sensex companies this year, the share of Sensex in total BSE market cap has fallen year-to-date (YTD).
As on 30Sep2021, Sensex and BSE 500 indices represent 44.3 and 91.8 per cent respectively of total BSE market cap.
It may be noted that the market cap of all listed BSE firms undergoes a change all the time because new listed companies are added (through initial public offerings or IPOs) and delisted companies go out of the data.
For example, BSE AllCap index had 849 stocks at the end of last calendar year; now it has 906 stocks aided mainly by the addition of new companies through IPOs, like, Zomato, Vijaya Diagnostic Centre, CarTrade Tech and Devyani International.
Sectoral Indices
Of the major BSE sector indices, the market cap of BSE Basic Materials index has increased the most (67.5 per cent YTD), whereas the BSE FMCG delivered the lowest market cap rise of 22.6 per cent YTD. Major stocks in BSE Basic Materials index are Tata Steel, UltraTech Cement, Hindalco, UPL Ltd, Vedanta Ltd and Pidilite Inds.
However, BSE Utilities market cap has jumped the most (73.8 per cent YTD) though its total market cap is just 4.2 per cent of total BSE market cap. BSE Utilities is represented by stocks such as, NTPC, Power Grid Corporation, Adani Transmission, Indraprastha Gas, Indian Energy Exchange and Gujarat State Petronet.
Of the major sectoral indices, BSE Finance is underperforming this year as bank stocks have failed to attract the attention of investors. In addition to BSE Finance and BSE FMCG, other indices that have delivered subdued returns this year are BSE Auto and BSE Healthcare.
The shares of FMCG, Healthcare and Auto indices in total BSE market cap have fallen from 8.9, 6.4 and 4.6 per cent respectively (as on 31Dec2020) to 7.9, 5.8 and 3.9 per cent respectively (as on 30Sep2020).
The returns generated by BSE Broad and Sectoral indices can be accessed in my previous article.
Table 2: BSE Broad and Sectoral Indices - market cap, P/E, P/B and dividend yield as on 30Sep2021:
As can be observed from Table 2 above, the price-earnings (P/E) ratio of Sensex is 30.8 whereas those of BSE Mid cap and Small cap are 33.4 and 44.0 respectively. The valuations of Indian stocks appear to be rich compared to valuations of Indian stocks historically.
However, financial markets have their own logic--reasoning and opinions of a single individual don't matter. Overall, market are efficient, but there are times when markets become highly inefficient by swinging between outright optimism and downright pessimism.
Earnings of several Indian companies (similar to several companies in other countries) have been negatively impacted in the past 18 months by the COVID-19 pandemic. As the earnings are depressed now, the valuation ratios, such as, P/E and P/B appear to be on the higher side.
The current valuations seem to be factoring in good economic growth in the next few years. As they say, markets are forward-looking; let us see how things pan out in the next few quarters.
Past data
Table 3 and 4: If you are interested in comparing the valuation ratios (P/E, P/B and dividend yield) of previous periods, you can compare the same with the data, as of 31Dec2020 and 31Mar2021, presented below:
Note: Market capitalisation or market cap is nothing but the market value of a listed company calculated by multiplying its current share price and the company's total number of fully paid-up equity shares outstanding on a particular date.
References:
BSE Index watch
Tweet dated 31Mar2021 - BSE market cap, P/E, P/B and dividend yield
Tweet dated 31Mar2021 - BSE market cap change %
Tweet dated 31Dec2020 - Index level, no of companies, BSE market cap, P/E, P/B and dividend yield
Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
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