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Know Your Index: DFM General Index & BSE Sensex

April 2016

By Fareem Chagla

April 25, 2016 | 15:15 | Dubai

With the advancement in technology, you as a trader or investor need not be restricted to one particular market. There are a host of avenues allowing you to participate across markets globally. While the element of convenience and ease cannot be questioned, the wide choices does lead a conundrum in the participants mind. Here’s a brief comparison of the DFM General Index (Dubai, UAE) and BSE Sensex (Mumbai, India) to aid your perspective in participating in either of the two. Both these indices are weighted by Free Float Market Capitalisation.

Companies making up the DFM General Index: 36 with the largest weightage to Emaar (20%)

Companies making up the BSE Sensex: 30 with the largest weightage to Tata Consultancy Services (11%)

 

Here’s a brief comparison based on Composition and Performance

  • Composition

Exhibit 1 - Source DFM

Real Estate / Construction (35%) and Banks (34%) are the largest contributors to the DFM General Index making up nearly 2/3rd of the total index.

Exhibit 2 - Source BSE India

While Banks (16%) are the common of the largest contributors to the BSE Sensex, Information Technology remains the biggest contributor. Besides, the index is slightly more diversified, reflecting in the top 2 sectors accounting for 37% of the overall weightage.

  • Performance

Chart 3 - Source Yahoo Historical

While the DFM General Index may have underperformance the BSE Sensex marginally for 3 of the 5 years considered, the DFM General Index returned 108% in 2013 leading to a significant outperformance over the entire period. Besides, while it underperformed the Indian counterpart in 2015, recent months (2016) have seen the index emerge amongst the best globally with a near 15% return.

Chart 4 - Source Yahoo Historical

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