Comparing the Indian market indices with the world's

02:55 Mins Read

How do Indian market indices compare with the world's? Watch this video to find out.


How do the indices in the Indian markets compare with the world’s stock markets? Well, firstly, India has two key broad market indices - the BSE Sensex and NIFTY 50. The American markets have 3 key indices - namely the Nasdaq Composite, the Dow Jones Industrial Average, and the S&P 500. While China has two key indices - the SSE Composite Index and the SZSE Composite Index. Next up, we’ll see how the index composition method compares. India’s BSE Sensex and NIFTY 50 are both free-float market-weighted indices. Meanwhile, in the American markets, the Nasdaq Composite and and the S&P 500 are both capitalization-weighted indices, but the Dow Jones Industrial Average is a price-weighted index. In China, the SSE Composite Index uses a Paasche weighted composite price index formula. What about the constituents of these key indices? In India, the BSE Sensex consists of the top 30 stocks in the Bombay Stock Exchange, while the NIFTY 50 consists of the 50 largest Indian companies listed on the National Stock Exchange. The Nasdaq Composite includes almost all the stocks listed on the Nasdaq, the Dow Jones Industrial Average includes the top 30 companies listed on American stock exchanges, and the S&P 500 includes 500 large companies listed in America. In China the SSE Composite Index is made of all the stocks traded on the Shanghai Stock Exchange, while the SZSE Composite Index includes all the companies listed on the Shenzhen Stock Exchange. And lastly, how do the returns from these indices compare? Well, keeping 2020 as the benchmark year, India’s NIFTY50 delivered an annual return of 14.90%. In the same year, the Nasdaq composite gave returns of 43.64%, the Dow Jones gave 7.25%, and the S&P 500 gave 16.26%. China’s key index - the SSE Composite - gave returns of 13.87% in 2020. So, that sums up how India’s indices compare with the world’s. Up next, we’ll see how India's economy has grown through the years.

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