 "Sundararaman Ramamurthy, managing director & chief executive officer of BSE Limited")
As the Sensex completes four decades, it offers a look into India’s economic transformation: From a closed economy to one of the world’s fastest-growing large markets, says Sundararaman Ramamurthy, managing director & chief executive officer of BSE Limited. Ramamurthy, in an email interview with Business Standard, reflects on the Sensex’s evolution. Edited excerpts:
What does the Sensex say about the evolution of India’s economy over the past four decades?
Sensex charts India’s journey from a closed and developing economy to a dynamic, open economy — the world’s fourth largest. It reflects milestones from early reforms and liberalisation to technology-driven growth, resilience through global crises, and the rise of a diverse, inclusive market. From humble beginnings to 85,000, this arc symbolises India’s shift from scarcity to entrepreneurship, institutional investment and broad-based participation. It also mirrors strong domestic growth, corporate ambition, financial sophistication, and confidence across India and beyond: A testament to a deeper, resilient, and vibrant financial ecosystem powering the nation’s economic transformation and the trust of Indian investors in the capital markets.
What has enabled India and its markets to create long-term wealth?
India’s capital markets have gained structural strength through a robust, collaboratively designed regulatory framework and progressive government initiatives. Measures such as investor protection, digitalisation, technological innovation, democratisation of savings, transparency, shorter settlement cycles, settlement guarantees, and strong risk management systems have enhanced trust and resilience. Simultaneously, government reforms like financial inclusion, simplified KYC norms, and UPI adoption have expanded access and participation. Together, these developments have created a transparent, efficient and inclusive financial ecosystem that enables long-term wealth creation for millions of investors.
What gives you confidence that India can sustain its economic growth?
India’s growth momentum in both the economy and equity markets is underpinned by strong factors. A young demographic, consistent reforms and initiatives empowering women and youth create a dynamic workforce. Financial inclusion, simplified KYC norms and UPI have expanded access, while Sebi’s investor protection and awareness programmes have boosted confidence. Rising financial literacy and mutual funds overtaking FPIs in holdings reflect a shift toward domestic savings. Combined with a high-consumption economy, a robust services sector, and growing financial savings, these factors provide a solid foundation for sustaining long-term economic and market growth.
What does the Sensex brand mean?
It represents the financial heartbeat and a key barometer of the Indian economy, reflecting the nation’s economic journey, investor sentiment and global aspirations. It is more than just a numerical index; it is synonymous with India’s corporate health and a symbol of India’s economic performance. A common person wanting to gauge the market sentiment, looks at Sensex levels and its movement. I view Sensex as a collective responsibility of the exchange to present an accurate mirror of India’s economy.
What are the turning points that shaped India’s capital markets?
The Sensex’s 40-year journey began in 1986, at a time when India’s capital markets were governed solely by the Securities Contracts (Regulation) Act (SCRA) of 1956. The watershed moment came in 1992 with the formation of Sebi, ushering in reforms that transformed market infrastructure, introduction of dematerialisation, digitalisation, simplified onboarding rules and broader investor participation. Over the next three decades, these changes built trust and accessibility, making equity markets integral to India’s growth story. In 2023, the relaunch of Sensex index derivatives marked another milestone; since the relaunch, the index has become the fastest-growing derivatives contract globally.
How has the investor profile changed since the Sensex was created?
When Sensex was launched in 1986, markets were primarily dominated by brokers, institutions and a select set of individual investors. Two structural shifts changed that: regulatory reforms-built trust which attracted institutions, and technology reduced access costs which brought in retail participation. Over years, unique client codes crossed 230 million while mutual fund folios stand close to 260 million. Total outstanding SIP accounts stand at over 100 million, with monthly inflows hitting nearly ₹30,000 crore.
How has the index composition changed over the years and how do you see the index capturing the rise of new-age, tech-driven businesses?
Sensex mirrors India’s economic evolution and capital market development. Over the 40 years of its launch, the index has seen a total of 93 companies being part of it, with four being constant in the index constituent over the years. This highlights the versatility of the index to reflect the changing economic landscape. For instance, in its early years, legacy industrial and manufacturing giants dominated it. Liberalisation in 1991 triggered a churn, bringing technology and telecom into the index and signaling the rise of services, finance, and tech as growth engines. Today, as new-age and tech-enabled businesses such as Zomato (Eternal) emerge, the index has captured this transformation.
What message would you give to today’s new investors?
Instead of picking individual stocks, long-term investing through index funds or ETFs offers simplicity, diversification, and consistent returns. My message is clear: understand what you invest in and invest in what you understand.
