S&P BSE 500 is designed to be a broad representation of the Indian market. Consisting of the top 500 constituents in the S&P BSE All Cap, the index covers all major industries in the Indian economy and 88% of India’s listed equity universe in terms of total market capitalization.
S&P BSE 500 index hit a 52 week low of 13,409 on October 23, 2018 almost 16% down from its all-time high of 15,938 recorded on September 3, 2018.
2018 has been a volatile year, where BSE 500 gained almost 17% over 2017, till early September, and then wiped out all these returns in less than 2 months.
SIPs help combat volatility in such unpredictable market conditions. Continuing to invest regularly in the equity markets, through highs and lows, gives the benefit of Rupee Cost Averaging. Which means that you get fewer units when markets are high and more units when markets fall, thus averaging the per unit price.
The chart below shows the volatility in BSE Sensex 500 Index this year.
Source: BSE India, 23rd October, 2018
