Speaking to ET Now, Ramamurthy said the longevity of any index depends on its construction methodology, periodic rebalancing, and ability to adapt to market realities. “Sensex has consistently evolved with global best practices. Today, it is a free-float market capitalisation index with a transparent inclusion and exclusion framework,” he said.
Despite tracking only 30 stocks, Sensex represents nearly 40% of India’s total market capitalisation and spans 11 of the country’s 12 major sectors. According to Ramamurthy, this broad sectoral representation ensures minimal diversifiable risk and strong correlation with the wider market. “That is why Sensex continues to be the first reference point whenever markets move,” he added.
Why BSE bought back control of the index business
Explaining the strategic rationale behind BSE acquiring full ownership of its index arm by buying out the S&P Dow Jones stake, Ramamurthy said index administration is central to India’s capital formation story.
“In a fast-growing economy like India, index investing and index-linked mutual funds are critical channels for retail participation in capital markets,” he said. “Decision-making had to be faster and fully aligned with domestic market needs. That required management control to be in India.”
With Sensex now managed as a 100% BSE subsidiary, the exchange has greater flexibility to introduce new indices, respond to investor trends and support long-term economic objectives, he added.
Turnaround built on capacity, technology and customer focus
Ramamurthy credited BSE’s turnaround over the past three years to a sharp focus on identifying market gaps, cutting inefficiencies and investing in technology. “If you identify a gap and fill it, you earn your right to exist,” he said.Key initiatives included cost optimisation, filling long-vacant positions, cultural change within the organisation and a massive upgrade in trading infrastructure. BSE’s derivatives processing capacity has expanded from about 10 crore orders a day earlier to nearly 1,800 crore orders daily, with the ability to handle over 22 lakh orders per second.
Listening to market participants, addressing concerns around concentration risk, introducing differentiated products such as Sensex derivatives and working closely with regulators were also critical to the recovery, he said.
Regulatory changes helped stabilise markets
On the frequent regulatory changes in the derivatives segment over the past year, Ramamurthy said India’s regulatory framework is consultative rather than unilateral. “Evolution can be painful, but these changes were driven by investor protection and market quality, not disruption,” he said.
While the broader derivatives market went through a phase of stabilisation, BSE benefited as a relatively recent entrant in index derivatives. “For us, the regulatory changes actually helped establish new products and gain traction,” he noted.
Addressing concerns around uncertainty in F&O regulations, Ramamurthy said clarity has improved significantly. “The intent is not to kill products or restrict participation, but to enhance awareness, protection and market depth. The regulatory environment today is progressive and constructive,” he said.
As Sensex enters its fifth decade, BSE believes deeper index investing, improved market infrastructure and collaborative regulation will continue to anchor India’s equity markets in the years ahead.