The S&P BSE Sensex and the CNX Nifty are the barometers of the Indian equity markets. The top 30 companies in terms of market capitalization constitute the Sensex and in Nifty it is the top 50 companies.
Did you know that the Sensex and the Nifty have dollar-term versions of themselves?
BSE Ltd’s Dollex-30 and NSE Defty are indices that are adjusted for exchange rate movements between the dollar and rupee. The constituents remain the same and so do the weightage of the stocks in the indices.
The S&P BSE Dollex 30 is the US dollar version of the S&P BSE SENSEX. The S&P BSE Dollex 30 index continuously adjusted for exchange rate movements between the dollar and rupee.
On the BSE, it is not just the Sensex that has a dollar version of itself, but the BSE 100 and BSE 200 also have dollar equivalents; called Dollex-100 and Dollex-200.
The NSE Defty is to the NSE Nifty what the Dollex is to the Sensex. The NSE Defty is dollar-denominated Nifty. So, if the rupee/dollar equation changes, that change is reflected in the NSE Defty vis-a-vis the Nifty.
These indices were developed by the exchanges to provide a benchmark to foreign institutional investors (FIIs) and off-shore funds, to provide them with an instrument for measuring returns on their equity investments in dollar terms.
Relevance of these indices
Indices such as the Dollex and the Defty will be most relevant to those investors who have invested in Indian equities via dollars. Other than FIIs, there are non-resident Indians (NRIs) who invest in equities in India using dollars. Since these indices take into account currency fluctuations, the returns compared with the rupee-term indices will be different.
