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An analysis of returns between the Nifty, the Sensex (indices with no sectoral cap) and the SX40 shows capping leads to only slight divergence in performance, at least in the short term

How caps impact index returns 

An analysis of returns between the Nifty, the Sensex (indices with no sectoral cap) and the SX40 (caps sectoral weight of 25 per cent) shows capping leads to only slight divergence in performance, at least in the short term. The year-to-date performance of all the three indices is identical — with each gaining little over 4 per cent. However, on a one-year basis, the Sensex, with the highest weight to the financial sector at over 40 per cent, performed the best with 6.5 per cent returns, while the Nifty and the SX40 have delivered 5 per