Best Value For Your Money from RamaKrishnaVadlamudi: Inside the BSE 500 and S&P 500: Top Stocks, Top Sectors, Big Risks 31Dec2025

Inside the BSE 500 and S&P 500: Top Stocks, Top Sectors, Big Risks 31Dec2025 23Jan2026

Compare and Contrast BSE 500 and S&P 500 Indices

(The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance. 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 update of earlier blog, "India Loves Banks, America Loves Tech as on 30Jun2025." Today's update compares and contrasts the data of both these indices as on 31Dec2025.

Indian and US equity markets may both look diversified on the surface, but their internal drivers are very different.

A closer look at returns, risk, valuations, top stocks and sector weights reveals how concentration shapes performance. This comparison of the BSE 500 and S&P 500 shows what investors are really betting on beneath the index label.

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Related blogs on US stocks / ETFs / Mutual Funds:

BSE 500 Versus Nifty 500: Same Market, Different Indices! 02Jan2026

India Loves Banks, America Loves Tech - What the Sector Weights Say! 30Jun2025 (Compare BSE 500 Versus S&P 500)

BSE 500 Versus S&P 500 Compare 31Dec2023

BSE 500 versus S&P 500 Compare 31Mar2023

BSE 500 versus S&P 500 Comparison 31Dec2022

Compare ETFs based on S&P 500, Russell 2000 and MSCI EM 26May2022

BSE 500 versus S&P 500 Indices 31Dec2021

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1. BSE 500 versus S&P 500 Index Fundamentals

Returns and risk: similar long-term outcomes, different paths:

Over 10 years, both indices delivered almost identical annualised returns (14.8%), but the journey differed. S&P 500 outperformed strongly in the last 1–3 years, reflecting the rally led by US technology stocks, while BSE 500 held its own over 5 years.

Risk-wise, S&P 500 shows higher volatility in the medium term but better recent risk-adjusted returns (higher 3-year Sharpe ratio), whereas BSE 500 looks steadier but less efficient recently on a risk-adjusted return (Sharpe ratio) basis.

Valuation and income profile:

BSE 500 trades cheaper on both P/E and P/B ratio, indicating lower earnings growth expectations but stronger asset backing. Dividend yields are similar, with a marginal edge to the S&P 500.

Overall, BSE 500 looks more value-tilted, S&P 500 more growth-oriented led by technology hyperscalers such as, Nvidia, Microsoft and Alphabet (Google).

Table showing BSE 500 versus S&P 500 Fundamentals: Returns, Risk and Valuation measures >

2. Top 10 Stocks

Stock-level concentration: breadth vs mega-caps:

S&P 500 is far more top-heavy.

It is heavily driven by a handful of mega-cap tech names; the top 10 stocks account for over 40 per cent of the index. Performance is therefore highly sensitive to Nvidia, Apple, Microsoft, Alphabet and peers.

In contrast, BSE 500’s top 10 stocks contribute about one-third of the index, with leadership spread across banks, energy, telecom and information technology (IT)—providing relatively lower single-stock risk as compared to the S&P 500.

On a standalone basis, BSE 500 is not truly “broad”: the top 10 stocks still drive about one-third of the index, and the top 10 sectors account for the bulk of market exposure.

Financial Services alone is nearly one-third of the index, making returns highly sensitive to the banking-NBFC-AMC-insurance cycle.

So while BSE 500 looks diversified by name count, performance is still meaningfully concentrated in a few large stocks and dominant sectors — just less extreme than the S&P 500.

Table showing top 10 stocks with weights of Top 5 and 10 stocks >

3. Top 10 Sectors

Sector composition: banks vs big tech:

BSE 500 is anchored by Financial Services (~31%), tied closely to domestic credit growth and consumption.

S&P 500 is dominated by Information Technology (~34%), reflecting global digital and artificial intelligence (AI) themes. Top five sectors form a much larger chunk of S&P 500, increasing sector concentration risk.

While consumer discretionary is more dominant in BSE 500, it has lower exposure in S&P 500. On the other hand, sectors like, healthcare and communication services have greater exposure in S&P 500.

The S&P 500 uses GICS (Global Industry Classification Standard), a globally standardised sector framework, so its sector weights are clean, comparable and mutually exclusive.

When IT is 34 per cent or Financials 13 per cent, that concentration is very precise in S&P 500.

BSE 500 does not strictly follow GICS. BSE 500 appears less concentrated by sector on paper, the underlying economic exposure — especially to credit, consumption and cyclicals — may be more concentrated than the sector table suggests.

Table showing top 10 sectors with weights of Top 3 and 5 sectors >

4. Summary and Investment Implications

Put together, the three charts above show a clear contrast:

BSE 500 is broader, more balanced and valuation-supported, while S&P 500 is narrower, more concentrated and growth/tech driven.

Returns, risks and fundamentals all line up with this structural difference.

What it means for investors:

BSE 500 offers diversification, reasonable valuations and dependence on India’s internal growth cycle, but with subdued near-term momentum.

S&P 500 offers higher recent returns and superior risk-adjusted performance, but at the cost of heavy reliance on a few stocks and one dominant sector.

In portfolio terms, they are complementary rather than substitutes: stability and breadth on one side, innovation-driven growth on the other.

What this really means is that the BSE 500 and the S&P 500 are built to win in different kinds of worlds.

The BSE 500 draws its strength from the slow, compounding engine of a growing domestic economy — banks financing growth, consumers spending more and businesses investing steadily. It doesn’t usually sprint, but it tends to keep moving.

The S&P 500, on the other hand, is shaped by companies that create new markets and technologies for the world.

When innovation accelerates — like AI, cloud or platforms scaling globally — returns can come fast and be spectacular. But that same concentration means setbacks in a few big names can ripple through the entire index.

So owning both isn’t about choosing the “better” index. It’s about holding two very different stories at the same time: one that grows through stability and participation, and another that grows through breakthroughs and scale. Together, they balance each other in a way neither can on its own.

This article is for informational and educational purposes only and does not constitute investment advice or a recommendation. Market returns shown above are based on historical data and past performance is not indicative of future results.

Readers should consider their own risk profile and consult their own investment adviser before making any investment decisions.

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References and additional data:

BSE Indices - BSE 500 factsheet PDF Dec2025

S&P Global S&P 500

iShares Core S&P 500 ETF

BSE 500 sector weights (daily updated)

NSE / Nifty Indices Nifty 500

Ten screenshots >

Please click on the images to view better >

BSE 500 factsheet >