Sensex@40: The Lodestar That Guides India

In 1982, while still in college, I was working with a stock market magazine owned by Harkisondass Lukhmidass (HL), then India’s No. 1 stockbroking firm and a well-known name on Dalal Street. One day, my boss, Pradip Harkisondass Dalal—a prominent merchant banker—asked me to ghostwrite an article for him. The topic: “Will the BSE Index touch 600 points?” At the time, the index was hovering between 250 and 300 points. Pradipbhai, who tragically died in a plane crash in 1988, had not chosen the topic randomly. He was a visionary who understood market direction. The index did eventually touch that level—but it took four years.

On January 2, 1986, the Bombay Stock Exchange (BSE), established in 1875, launched its benchmark index. It comprised 30 well-established and financially sound companies across sectors, selected for their large free float and active trading. The Sensex began at 549.43 points.

Four decades later, the index—capturing every peak and trough, boom and bust—has grown 156-fold, touching a historic high of 85,836 on September 26, 2024. The term Sensex itself is a portmanteau of “Sensitive” and “Index”—aptly reflecting how markets react to global cues. If the U.S. sneezes, India catches a cold.

In December 2024, when the Sensex hovered around 78,000, gold was priced at Rs76,000 per 10 gm. The debate then was: which would hit 100,000 first—Sensex or gold—in 2025?

Gold won that race, crossing Rs100,000 on April 22, 2025, and surging further to Rs170,000 per 10 gm by January 29, 2026.

The Sensex, meanwhile, after scaling 85,000, retreated and currently trades around 77,000, weighed down by geopolitical tensions in West Asia.

To mark 40 years of the Sensex, the BSE has released a comprehensive report titled Sensex@40: Four Decades. One Index. Reflecting India’s Growth Story. It notes: “The Sensex has grown at an annualised rate of 13.4% over the last four decades, closely tracking India’s nominal GDP growth of 12.97%—underscoring its role as a true economic barometer.”

As CA Kanan Bahl observed on LinkedIn, “97 different companies have been part of the Sensex over four decades. Sector leadership has shifted from manufacturing and heavy industry to financials, IT, and consumer businesses.”

The Sensex, synonymous with BSE, has continuously evolved—adding companies that reflect emerging sectors and dropping those that no longer meet its criteria. Notably, four companies—Hindustan Unilever, Larsen & Toubro, ITC, and Reliance Industries—have been part of the Sensex since inception. These companies deserve big praise. Their longevity reflects their ability to reinvent themselves and consistently reward shareholders.

Today, everyone watches the Sensex—governments, institutions, businesses, and investors. It mirrors the nation’s economic mood. Every Finance Minister closely tracks its movement after presenting the Union Budget, treating it as an instant report card.

Between 1986 and 2014, the Sensex rose from 549 to 25,000. In just the next decade (2014–2024), it surged from 25,000 to 85,000. The pace of growth has clearly accelerated.

The index also faced competition when the NSE launched the Nifty 50 in 1996—a broader basket of 50 stocks that is equally tracked today.

Over 40 years, the Sensex has witnessed countless highs and lows—each milestone telling its own story. Consider a few: The index first doubled to 1,000 on July 25, 1990, supported by good monsoon and strong corporate earnings.

Economic liberalisation under the P V Narasimha Rao government saw the Sensex cross 2,000 points on January 15, 1992. It then surged to 3,000 within weeks, fuelled by the reformist Budget presented by Finance Minister Dr Manmohan Singh.

I vividly recall Big Bull Harshad Mehta’s famous remark after that Budget: “India is a turnaround scrip.” Within a month, the Sensex crossed 4,000.

The Pied Piper of Dalal Street dominated newspaper headlines, magazine covers and investor imagination. His aggressive bets, including driving ACC shares from Rs 200 to Rs 9,000 in months, were justified by his so-called “replacement cost theory.” But the rally proved unsustainable. The 1992 securities scam triggered a market crash, wiping out investors and eventually landing Mehta in jail, where he later died.

The market’s roller-coaster nature became evident—it was never meant for the faint-hearted.

After a period of consolidation, the Information Technology boom propelled the Sensex to 6,006 on February 11, 2000.  After that there was no looking behind. On December 11, 2007, the Sensex closed above 20,000. Notably, it took just 483 sessions to climb from 10,000 to 20,000, compared to 7,297 sessions to reach 10,000 from its base of 100.

Sensex Milestones

·       1,000 — 1990

·       10,000 — 2006

·       25,000 — 2014

·       50,000 — 2021

·       85,000 — 2025

During the UPA years, markets were jolted by events such as the U.S. subprime crisis (Lehman collapse), fears around Participatory Notes (P-Notes), and rupee volatility.

One episode stands out. In 2007, fears that SEBI might ban P-Notes—which then accounted for nearly 50% of FII inflows—triggered panic selling. The Sensex crashed 1,744 points intraday, its steepest fall at the time. Finance Minister P Chidambaram later clarified there was no such move, helping markets recover partially.

Under the NDA government, markets have broadly trended upward, barring disruptions like the Covid-19 pandemic.

When the Narendra Modi-led BJP won a decisive mandate in 2014, the Sensex crossed 25,000 for the first time on May 16, touching 25,364.71. In 2019, following the NDA’s re-election, it breached 40,000 on May 23.

Historic Events That Shaped the Sensex

·       1991 — Liberalisation

·       1992 — Budget & Securities Scam

·       2000 — Dotcom Bust

·       2008 — Global Financial Crisis

·       2020 — Covid-19 Pandemic

·       2026 — West Asia Conflict

Source: BSE Report

The Indian stock market has matured significantly over the past four decades. Stronger regulations have curbed fly-by-night operators and scams. The democratisation of information—through media, digital platforms, and advisors—has increased investor’s participation and awareness.

As the BSE research report notes: "The Sensex remains a robust barometer of India’s economic health and capital markets, adapting to structural shifts and global integration. It will continue to serve as a compass for investors and a symbol of progress as the country moves forward to achieve Viksit Bharat.”

From 500 to 85,000, the Sensex journey has been extraordinary. The next milestone—100,000—appears inevitable. And beyond that? 200,000. The only question is: how soon?