As highlighted in a prior post, "Getting to Know the S&P BSE 500," the S&P BSE 500 is considered a proxy for India's listed equity market, as it covers more than 88% of India's listed equity universe in terms of total market capitalization. The index also offers diversified exposure to all key sectors of India's economy and all size segments. In this post, we will review the historical performance of the S&P BSE 500.
As shown in Exhibit 1, from Aug. 1, 2006, to April 30, 2018, the S&P BSE 500 posted an annualized total return of 13.4%, outperforming the S&P BSE 100 and S&P BSE 250 SmallCap Index, while lagging the S&P BSE 150 MidCap Index. The S&P BSE 500 exhibited volatility that was close to the S&P BSE 100's volatility - not surprising given that S&P BSE 100 constituents account for approximately 79% of the total index weight (see Exhibit 1).
Exhibit 2 shows rolling absolute returns for three-year horizons (750 trading days). All indices compared here performed similarly for most of the period, showing relatively higher correlations with each other. Historically, the S&P BSE 500 and S&P BSE 100 exhibited relatively lower probabilities of negative returns over the three-year investment horizon.
As illustrated in Exhibit 3, out of the total 2,192 trading days observed from Aug. 1, 2006, to April 30, 2018, the S&P BSE 500 noted only 113 trading days with returns less than 0%. The relatively more volatile S&P BSE SmallCap 250 Index noted the greatest (452) number of days with negative returns, while the S&P BSE 100, which represents large caps, noted the fewest (52) number of days with negative returns.