BSE Broad and Sector Indices Returns 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 an earlier blog published on 30Dec2022. The
data here show how the broad and sector indices of BSE Limited have
performed on an annual and trailing basis as at the end of 29Dec2023 (which is the last trading day of 2023).
(write-up continues below)
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Table 1: Trailing Returns - BSE Indices - year-to-date (YTD) to 10-year returns 31Dec2023 >
Please click on the table for a better view >
BSE Sensex has delivered a decent return of 18.7 percent in calendar year 2023, as shown in table 1 above. The first and third quarter were subdued for Sensex, but the second and fourth quarter of 2023 delivered better returns pulling up overall returns for the year.
But Sensex's returns are pale compared to mind-boggling returns delivered by BSE Midcap and BSE Smallcap indices, with returns of 45.5 and 47.5 percent respectively in 2023.
On a 5-year and 10-year trailing returns basis, BSE Smallcap index has provided the highest returns among broad indices, followed by BSE Midcap index.
As highlighted in this blog, Sensex has become less relevant, in recent years, for investors for generating portfolio alpha and they have been flocking to mid- and small-cap stocks with increased ferocity.
Among the sector indices, BSE Reality index with a return of 79.5 percent has provided the highest returns in 2023, followed by BSE capital goods (66.9 percent), BSE PSU index (55.3 percent), BSE Auto (46 percent) and BSE IPO index (41.4 percent).
On a 5-year and 10-year trailing returns basis, BSE Capital Goods and BSE Realty indices have provided the best returns, followed by BSE IPO and BSE Info Tech indices.
At the start of 2023, nobody could have guessed capital goods and real estate stocks would provide the best returns on a 5-year and 10-year basis. These stocks were laggards for several years till end of 2022, but bounced back strongly in 2023 (one could check the annual returns -- which provide a better sense of cyclical nature of assets -- of them in table 2 below).
Table 2: Annual Returns - BSE Indices - 2014 to 2023 - as on 31Dec2023 >
Please click on the table for a better view >
Calendar year / annual returns provide a better sense of how stock markets and indices move from one year to the next. The cyclical-cum-uncertain nature of asset markets can be gleaned from glancing at the annual returns.
As shown in table 2 above, years 2014, 2017, 2019, 2020, 2021 and 2023 were good for Indian stocks; while years 2015, 2016, 2018 and 2022 provide nil to tepid returns to investors.
The trick of making decent money in markets is to stay invested for longer time horizons, so that one's portfolio of stocks can withstand the market volatility better.
Tables 3 and 4: BSE AllCap and BSE 500 Indices and their sector representation >
Indian equity indices, for long, have been suffering from concentration risk, which has been highlighted several times in these blog posts previously. Indian indices are dominated by Finance, Information Technology and FMCG (fast moving consumer goods) stocks as shown in tables 3 and 4 above.
These top three sectors account for almost 48 percent (or about half) of the total in both BSE Allcap and BSE 500 indices. The concentration of top 10 and 15 sectors also can be seen in the above tables.
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Additional screenshots from Value Research (data as on 31Dec2023)
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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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He blogs at:
https://ramakrishnavadlamudi.blogspot.com/
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