BSE Broad and Sector Indices Market Cap 31Dec2023
(This
is for information purposes only. This should not be construed as a
recommendation or investment advice even though the author is a CFA Charterholder. Please consult your financial
adviser before taking any investment decision. Safe to assume the author has a vested
interest in stocks / investments discussed if any.)
This is an update of my earlier blog
published on 31Dec2022. The following tables show how the market
capitalisations of broad and sector indices of BSE Limited have
performed during the past one year, that is, between end-December 2022 and
end-December 2023.
(write-up continues below)
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Related blogs:
BSE Broad and Sector Indices Market Cap 31Dec2022
BSE Broad and Sector Indices Market Cap 31Mar2022
BSE Broad and Sector Indices Market Cap 31Dec2021
BSE Broad and Sector Indices Returns 31Dec2022
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Table
1: BSE Broad and Sector Indices' Market Cap as on 31Dec2023 - index
representation - Index valuation measures (P/E, P/B ratios and dividend
yield) >
Please click on the table for a better view >
As shown in above table, market capitalisation of all BSE companies as on 31Dec2023 is Rs 364.29 lakh crore. BSE stock exchange is formerly known as Bombay Stock Exchange -- it's now officially known as just BSE Limited. As on 31Dec2023, number of companies that are listed on BSE is 4,757.
The
market cap of BSE 500 index represents 90.1 percent of total BSE market
cap and BSE AllCap index represents 96 percent of total BSE market cap. Of the sectoral indices, BSE Financial Services index (in 2022, BSE
Finance index was renamed as
BSE Financial Services) is the biggest by market cap with a market cap
of Rs 82.09 lakh crore, representing 22.5 percent of total BSE market cap.
BSE
Financial Services index is followed by BSE Consumer Discretionary, BSE
Teck, BSE Info Tech and BSE Commodities indices (BSE Basic Materials was renamed as BSE Commodities in 2022) indices.
You can also find the number of stocks each index contains in the table 1 shown above. For example, BSE AllCap index has 1,170 stocks as on 31Dec2023.
Among the sectoral indices, BSE Capital goods (not shown in table 1 above) -- with a PE ratio of 47.5, PB ratio of 7.4 and dividend yield of 0.59 percent -- is the most richly valued index. Other sectoral indices with rich valuations are: BSE consumer discretionary, BSE FMCG, BSE industrials and BSE healthcare.
Table 2: BSE Broad and Sector Market caps - market cap change - Change during the past one year, that is, between end-Dec2022 and end-Dec2023 >
Please click on the table for a better view >
Broad Indices
The biggest positive surprise of calendar year 2023 is the spectacular rise of small- and mid-cap stocks in India. During 2023, the market cap of BSE Smallcap index grew by a staggering 46.3 percent, from Rs 44.30 lakh crore to Rs 64.82 lakh crore (see table 2 above).
BSE Smallcap index's share to total BSE market cap of all listed companies used to be 15.7 percent one year ago, which grew to 17.8 percent now.
The market cap of BSE Midcap index rose by 38.4 percent in 2023, growing from Rs 43.28 lakh crore to Rs 59.91 lakh crore.
The euphoria in small- and mid-cap stocks can be gauged from the fact that Sensex's market cap rose by just 18.2 percent, versus 46.3 percent for Smallcap and 38.4 percent for Midcap index in 2023.
One more interesting fact is: in 2023, the absolute growth in Sensex market cap, at Rs 21.77 lakh crore, is lower than that of the combined growth of Rs 37.15 lakh crore in market caps of BSE Midcap and Smallcap indices.
BSE Sensex's share (in total BSE market cap) itself fell from 42.5 percent as on 31Dec2022 to 38.9 percent as on 31Dec2023 (see table 4 below).
The absolute growth in market cap of all BSE listed companies, numbering 4,757, is a humongous Rs 81.91 lakh crore, indicating a rise of 29 percent in 2023. The increase in market cap is a combination of rising Indian stocks, as well as the addition of newly listed stocks in BSE.
Sectoral Indices
BSE Industrials and BSE Capital Goods indices have common stocks, like, Larsen & Toubro, Hindustan Aeronautics Ltd, Siemens, Bharat Electronics, ABB, Polycab India and BHEL. BSE Industrials also has stocks in automobile sector, like, Ashok Leyland and Escorts Kubota.
Table 3: BSE Broad and Sector Market caps - Change in Valuation Ratios - Change in valuation ratios over the past three years
Please click on the table for a better view >
As shown in table 3 above, PE ratio and PB ratio of Sensex at the end of 2023 are higher compared to end-2022. And dividend yield is lower. But surprisingly, as per data from BSE, the current valuation of Sensex is lower compared to data at the end of 2021.
For example, Sensex's PE ratio as on 31Dec2023 is 25.6 versus 27.9 as on 31Dec2021.
And the same is case with BSE Midcap and Smallcap indices - their current PE and PB ratios are lower compared to numbers as on 31Dec2021. It is obvious the stocks that are part of these indices have improved their earnings over the past two years, resulting in lower valuation ratios for these indices (Or, is there any change in the methodology of these ratios by BSE recently? I'm not sure about that, readers may chip in with their comments).
Based on the PE ratios, valuations have come down drastically for BSE Financial Services and BSE Info Tech indices in the past two years. Tepid earnings for FMCG in the past two or three quarters made BSE FMCG index look more expensive compared to December 2021.
Table 4: How Sensex is becoming less relevant compared to BSE Midcap and Smallcap indices -
The following table is quite a revelation for investors >
The market cap of Sensex used to represent almost 50 percent of the total market cap of all BSE listed companies back in December 2020. One could see its share has progressively come down to 38.9 percent now.
At the same time, the share of BSE Midcap and Smallcap indices has gone up significantly in the same period. You can check those figures with this weblink and that weblink.
Summary
Financial markets in general and equity markets in particular are driven more by future expectations rather than past earnings / fundamentals or past macro indicators.
While it is difficult to forecast the future trajectory of Indian stocks, the current trends and momentum indicate that investors may continue to enjoy decent returns during the first quarter of the new year 2024.
India VIX is currently at 14.50, which is low by historical trends. The volatility index is a measure of market's expectations of volatility in near term and is based on the Nifty Index option prices.
Even CBOE VIX (volatility index) is also low at 12.50. It tracks the 30-day expected volatility of the US stock market. Both India VIX and CBOE are at lows.
Markets by nature are volatile and uncertain, as such it's better for investors to prepare themselves for enhanced volatility.
The fourth quarter results season for Indian stocks will start in less than two weeks time. Investors may be better off watching the quarterly results more closely than usual and brace themselves for market volatility.
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Notes:
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.
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Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / 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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