Sensex@40: The Index is like cricket, demands a long, patient innings

With a batting line-up of infra spending, digital strength and manufacturing, the index is geared for a high-scoring second innings of long-term growth

‘Picture abhi baaki hai’…but let’s roll the highlight reel of the last 45 years and watch how the BSE Sensex went from a shy 1986 (base year 1979) debutant to the ultimate Sholay-like blockbuster. 

1979-1991: Pre-Gavaskar era of Indian cricket 

Sensex launched at 100 in 1979 with just 30 stocks: Mostly sleepy public sector undertakings and old-economy giants. India was playing ultra-defensive Test cricket, leaving every ball outside off-stump, blocking for draws and the economy crawling at 3–4 per cent annual growth. The licence raj was like certain biased umpires of the 1980s: You sneezed and you were given out leg-before-wicket. Compounded annual growth rate (CAGR) in this phase was a modest 12–13 per cent but after inflation, real returns were almost zero. A few individual stars shone, such as Vijay Merchant, Vijay Hazare, Vinoo Mankad and M A K Pataudi, but the team was mostly losing or drawing. 

1991-2007: Kapil Dev lifts the World Cup 

The 1991 liberalisation-budget was India’s 1983 Prudential Cup moment. Suddenly, the gates opened: Foreign money flowed in, private players arrived and new sectors exploded — telecom, information technology (IT), banking, fast moving consumer goods — to hit boundaries. Sensex zoomed from around 1,000 in 1990 to 20,000 by 2007: A blistering 20 per cent plus CAGR over 17 years. It was as if Sunil Gavaskar, Sachin Tendulkar, Rahul Dravid and Virat Kohli were all batting together at their peak with elegant cover drives, lofted straight sixes and wristy flicks in every shot. 

The Securities and Exchange Board of India (Sebi) arrived as the new impartial umpire; payment crises were replaced by settlement guarantee funds; vandho gave way to demat accounts; and the galo disappeared with electronic trading. The Wild Wild West got law and order under a sheriff. 

2008–2014: Gully cricket on a potholed pitch 

Bankruptcy of Lehman Brothers in 2008, policy paralysis back home and double-digit inflation – the pitch had developed cracks; the ball was seaming viciously; and batsmen were trying to just survive. Sensex delivered almost zero returns for six years. “India story khatam ho gaya,” declared pundits. Yet, like Cheteshwar Pujara and Ajinkya Rahane taking body blows on a Perth track but refusing to lose their wickets, corporate India and the broader economy absorbed the pain and stayed in the game. 

2014 onwards: Rohit Sharma and T20 mode 

The Narendra Modi wave; reforms such as goods and services tax, Insolvency and Bankruptcy Code; Digital India; establishment of the Real Estate Regulatory Authority, massive infra push – suddenly India started playing fearlessly, lofting cover drives with a straight bat. Formalisation, financialisation and digitisation injected pure adrenaline into the system. The Sensex jumped from 25,000 in 2014 to over 85,000 today: A 14 per cent CAGR even after the timeout induced by Covid-19 in 2020. Real returns were better than the past cycle. Corporate earnings grew at 15 per cent CAGR, banks were cleaned up, and startups turned into unicorns faster than Rohit hits sixes. 

What made this 17 per cent CAGR possible over 45 years? 

Demographics: India’s youth bulge is like having Rohit Sharma and Virat Kohli opening, with Shubman Gill, Yashasvi Jaiswal and Suryakumar Yadav still to come. 

Domestic savings: The middle class put money into equities and real estate instead of just bank fixed deposits. 

Reforms: Every decade someone hit a slow-motion six with reforms to boost economic growth. 

IT and pharma brought in precious US dollar earnings, acting like Mahendra Singh Dhoni’s lightning glovework behind the stumps to protect India’s current account. 

Evergreen consumption: 1.4 billion people will keep buying as income level rises. 

Why I am confident that the Sensex will go higher? 

The capex cycle has only just taken off: Government spending ₹11 trillion on infrastructure, private capex taxiing on the runway. 

Manufacturing revival through China-plus-one and production-linked incentive schemes: The world is watching India becoming the fifth largest manufacturer. 

Consumption is upgrading: Even village youngsters now own iPhones, air conditioners and invest in mutual fund systematic investment plans. 

Digital economy: Unified Payments Interface volumes bigger than the rest of the planet; fintech and e-commerce are rewriting the rules. 

Formal economy is still only 50–60 per cent — the remaining informal portion turning white will turbocharge tax revenues, corporate earnings and valuations. 

Yes, risks remain: Inflation bouncers, global rate beamers, geopolitical fielders lurking at third man, but our batting lineup is so deep that even Numbers 8, 9 and 10 can bat like Ravindra Jadeja and Ravichandran Ashwin. 

‘Picture Abhi Baki hai’, my friend. This Sensex hero is just stepping out after the interval for the real climax. A 17 per cent CAGR was the past; the next phase is equally exciting. 

Keep investing like Dhoni plays: Ice-cool nerves,  running like crazy to take singles when boundaries are not coming but not losing wicket under pressure and finally ruthless finishing by hitting big when a weak ball comes. 

The writer is MD, Kotak Mahindra AMC