The birth of ‘Sensex’, and its 37-year journey to 64,000 points

The birth of ‘Sensex’, and its 37-year journey to 64,000 points

The BSE Sensex, the headline stock market index in India, has had quite a journey since its inception. Sensex is a key benchmark in the Indian stock market; the index has a significant impact on investor sentiment and overall economic outlook. From its birth in January 1986 with the trading levels of about 550 points, to reaching its all-time high of over 64,000 points today in 2023, Sensex has managed to maintain its boom, despite having a sharp decline in the 2008 financial crisis and the 2020 pandemic.Origin of the word ‘Sensex’

Coined by stock market analyst Deepak Mohoni, the term ‘Sensex’ is a combination of ‘Sensitive’ and ‘Index’. The term reflects the stock market’s sensitivity, where even small events can significantly impact stock prices. Sensex is calculated using the free-float market capitalization-weighted methodology. It captures the price movement of the most actively traded stocks on the Bombay Stock Exchange (BSE).

Major corrections in the index

The late 1990s saw a global technology boom, impacting the Indian stock market. The Sensex crossed the 5,000 mark in October 1999. However, the subsequent Y2K crisis and dot-com bubble caused a major correction. During the 2008 global financial crisis, the Sensex faced significant challenges. It experienced a sharp decline, reaching a low of 8,160 points in October 2008. The crisis had a severe impact on the Indian share market, causing widespread panic and investor losses. However, the index and broader markets recovered from the 2008 lows.

Sensex’s milestones

Sensex has bagged quite a few notable milestones as well. Sensex crossed the 20,000 mark for the first time in December 2007, reflecting the growing strength of the Indian economy. In January 2021, the Sensex crossed the 50,000 mark for the first time, a historic milestone. Continuing its upward trajectory, Sensex reached the 60,000 mark in September 2021, further cementing its significance in the Indian stock market.