In this Mint article, Research Director and Senior Fellow, Niranjan Rajadhyaksha juxtaposed the fluctuations in the Sensex with the oscillations of the Indian economy. Excerpts:
"The frequent churn in the Sensex is as much as a testament to the dynamic nature of the Indian economy as the decline of a once-dominant airline, Jet Airways, which suspended operations last week. As these pages have pointed out earlier, the churn in top listed firms in India has been much more than even the US in the post-liberalization era.
A close look at the components of the Sensex also offers useful clues about the changing nature of the Indian economy. The first version of the Sensex was almost entirely dominated by manufacturing. As the services and non-tradable sectors have grown, the role of manufacturing has declined. The second reason is that areas that were once the monopoly of the public sector have been opened up to private sector participation after the 1991 reforms. Banking and telecom are two obvious examples. There are now nine financiers in the Sensex, if one includes HDFC and Bajaj Finance. Manufacturing companies in the Sensex have halved to 13 from 26 in 1988..."
Read the whole article here.