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Does linking investments or fund flows to the Sensex enhance the chance of outperformance? The record of the past few years shows the 30-share Sensex, the key benchmark index of the BSE, has outperformed the 50-share Nifty of the National Stock Exchange (NSE).
Data shows that as on October 31, Sensex had gained 16.5 per cent from the lows of the past one year to hit a life-time high of 40,129. Comparatively, the Nifty index lagged behind. Till October 31, when the Sensex was hitting new highs, the Nifty index had gained 14.4 per cent from its lows of the past year.
Nifty is yet to take out its previous peak of 12,103 hit in June.
The Sensex has outperformed the Nifty on two- and three-year basis too.
Analysts point out that the 20 stocks, which are part of the Nifty index and not present in the Sensex, lagged behind, as most money flowed into the top 30 stocks, making them gain faster.
Globally, the trend is that exchange-traded and other large funds have linked their fund flows and investments to key benchmark indices, meaning if they are linked to the Sensex in India, there is a higher chance of outperforming, analysts say.
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