Launched in 1986 with a base value of 100, the Sensex has completed four decades as India’s most widely tracked equity benchmark. Over this long period—spanning liberalisation, global crises, reforms, and shifts in investor participation—the index has delivered annualised returns of around 13 percent, a figure that closely mirrors India’s nominal economic growth.
This alignment underscores a core truth about equities in India: over extended timeframes, stock market returns tend to track the growth of the underlying economy. Periods of sharp rallies and deep corrections have come and gone, but the long-term trajectory reflects expanding corporate earnings, rising productivity, and increasing formalisation of the economy.
The Sensex’s journey also mirrors structural changes in Indian markets. From a retail-light, domestically focused market in the early years, participation has broadened to include institutional investors, foreign capital, and millions of retail investors via mutual funds and direct equities. Reforms such as dematerialisation, electronic trading, improved disclosures, and tighter regulation have strengthened market depth and resilience.
While short-term returns have often been volatile and sentiment-driven, the 40-year record reinforces the case for equities as a long-term wealth creation tool, particularly in a growing economy like India. The Sensex’s 13 percent annualised return highlights not just market performance, but the compounding power of staying invested across cycles.
