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When the Sensex was first published in 1986, India was still a closed, slow-moving economy trying to find its footing. The index began with a base value of 100 (set in 1978-79), and on its first recorded close in April 1986, it hovered around 550. Forty years later, the Sensex isn’t just a market barometer: It is a time capsule of India’s transformation. If you want a shorthand for India’s transformation, you can trace it on the Sensex chart.
In its early years, the index reflected an economy built on industrial conglomerates, consumer staples, and manufacturing giants. Capital markets were shallow, retail participation was limited and growth prospects were constrained by policy and structure. Liberalisation in 1991 changed all of that. As India opened its doors, foreign capital arrived, domestic competition intensified and Indian entrepreneurs gained the confidence to dream globally. Markets responded. Valuations re-rated, liquidity deepened and new sectors emerged. The compounding has been extraordinary. One lakh rupees invested since inception is worth nearly ₹8 crore as of November 30, 2025, about 15 per cent compound annual growth rate for over four decades. The more interesting story is how the drivers of that compounding evolved. India is no longer being priced on its licences and quotas, it is being priced on its possibilities.
No market journey is smooth, and ours certainly wasn’t. The Harshad Mehta episode in 1992 shook public faith but triggered some of the most important reforms in modern market history: Electronic trading, stronger settlement systems and improved regulatory oversight. The dotcom bust, the global financial crisis, the taper tantrum and the pandemic crash all felt existential in their time. Yet each crisis left the market more resilient and more sophisticated. Markets don’t avoid volatility; they grow through it. The Sensex carries the scars of our stumbles, but also the strength built from each recovery.
What makes the Sensex truly fascinating is not just how much it has risen but what it now represents. The index that once featured steel, cement, and textiles now showcases private banks, technology leaders, pharma innovators, consumer giants, insurers, and diversified financials.
This shift is not cosmetic rebalancing; it mirrors the structural transformation of the Indian economy. We moved from scarcity-driven manufacturing to a services powerhouse; from public-sector dominance to private-sector leadership; from industrial age to digital age. It is hard to imagine today but Infosys struggled to find subscribers for its 1993 IPO. Four decades later, India exports more than $200 billion of IT services, and is home to a thriving startup ecosystem, and boasts of a market structure anchored by world-class financial institutions.
Just as corporate India evolved, so did the Indian investor. Two decades ago, participation was limited to a sliver of the population. Today, more than 150 million demat accounts exist and SIP flows form a dependable domestic ballast that often offsets foreign volatility. The cultural shift is remarkable. When you have a show called Saas Bahu Aur Sensex, you know financialisation has entered the mainstream. Households that once saved primarily in gold and real estate now use the market for retirement, children’s education, and long-term wealth creation. The Sensex, once a number buried inside business newspapers, now sits on millions of phones and influences millions of dreams.
Alongside market development came economic expansion of an unprecedented scale. In 1991, India had six billion dollars of foreign exchange reserves; today, it has more than six hundred billion. Our market cap-to-GDP ratio has moved from around 25 per cent in the mid-80s to more than 100 per cent today, reflecting both formalisation and corporate growth. Car production has risen from 2 million units in the early nineties to about 4 million. And a country that once had no unicorns now has over a hundred. These aren’t disconnected statistics. They reflect rising productivity, expanding consumption, growing competitiveness, and accelerating aspiration. The Sensex did not create these changes but it absorbed them, amplified them, and eventually reflected them.
Yet for all the macro numbers, the Sensex also offers everyday lessons. You don’t need perfect conditions to create long-term wealth; you need participation and patience.
And volatility is not a sign that something is broken; in India, it has often been the price of progress. Investors who stayed through crises, even reluctantly, saw the power of compounding reward them over time.
What might the next forty years look like? If history is any guide, the Sensex at 80 will look nothing like the Sensex at 40.
New leaders will emerge, in green energy, digital public infrastructure, AI-driven productivity, biotechnology, advanced manufacturing, and consumer-tech platforms serving a much richer middle class. Some of today’s stars will fade, just as many giants of the 1980s quietly slipped out of the index. That is the nature of a living market. It evolves because the country evolves.
But one constant will remain. The Sensex will continue to be a mirror: Of our ambition, our confidence, our innovation, and our belief in the future. The Sensex at 40 is not an occasion for nostalgia. It is a reminder that steady belief compounds. If the first 40 years mapped India’s rise, the next 40 may well map its arrival.
The writer is MD & CEO, Edelweiss MF
