Table 3: Calculation of average CAGR and standard deviation
| Year End | CAGR | Year End | CAGR |
|---|
| 1979* | 15.95% | 2002 | 15.35% |
| 1980 | 15.31% | 2003 | 13.15% |
| 1981 | 14.54% | 2004 | 13.15% |
| 1982 | 14.82% | 2005 | 11.79% |
| 1983 | 15.01% | 2006 | 10.12% |
| 1984 | 15.20% | 2007 | 8.26% |
| 1985 | 13.67% | 2008 | 13.97% |
| 1986 | 14.07% | 2009 | 10.50% |
| 1987 | 15.01% | 2010 | 10.03% |
| 1988 | 14.15% | 2011 | 13.28% |
| 1989 | 14.07% | 2012 | 12.30% |
| 1990 | 13.52% | 2013 | 12.60% |
| 1991 | 11.91% | 2014 | 11.01% |
| 1992 | 11.20% | 2015 | 12.95% |
| 1993 | 10.70% | 2016 | 14.40% |
| 1994 | 10.48% | 2017 | 12.60% |
| 1995 | 11.76% | 2018 | 13.75% |
| 1996 | 12.23% | 2019 | 13.63% |
| 1997 | 12.01% | 2020 | 13.10% |
| 1998 | 13.28% | 2021 | 10.28% |
| 1999 | 11.62% | 2022 | 13.33% |
| 2000 | 13.22% | 2023 | 8.17% |
| 2001 | 14.81% | 2024 | |
| Average CAGR | 12.80% |
| Standard Deviation | 1.84% |
From analysis we observe that average CAGR is of 12.80% per annum. This simply shows that in long run BSE 30 has provided roughly 12.8% return to its investors.
Standard deviation of the above CAGR is 1.84%. This shows that deviation is very less.
A standard deviation of 1.84 is a measure of how spread out a set of data is. It means that the values in the data set typically deviate from the mean by a value of 1.84. A low standard deviation means values are close to the mean, while a high one means values are more spread out. For a normal distribution, it would imply that roughly 68% of the data points fall between 1.84 standard deviations below and above the mean.95% of the data points fall between 3.68 standard deviations below and above the mean.
In finance, standard deviation is used to measure the volatility of an investment. A standard deviation of 1.84 would mean that an investment's returns have fluctuated by 1.84 on average over a specific period.
5. Major Events during Life Time of BSE 30
Since its inception in 1996 BSE 30 has witnessed many ups and downs. The worst year on BSE 30 was 2008 in which it fell sharply due Global Financial Crisis. And interestingly 2009 was the best year as BSE 30 index recovered sharply.5
Life story of BSE 30 can be divided in to two phases viz. Bear phase and bull phase.
Some notable years of bear phase can be described as follows:
1990:The index crossed the 1,000-point mark for the first time, spurred by early economic liberalization policies.
1992 Harshad Mehta Scam:The index crashed dramatically from over 4,500 points after the "Harshad Mehta bull run" collapsed as the financial irregularities came to light. This included a single-day fall of over 12%.
1996: BSE 30 witnessed a losing streak in the year of its inception for a straight 5 months.
2000-2001- In 2000 dot.com bubble got burst and all indices of the world seen sharp declines. BSE 30 also experienced decline during this time.
2008: BSE 30 plunged to its almost half value in the year of 2008 due to global financial crisis. Global financial crisis was started due to subprime mortgages in USA.
2011: Due to negative sentiments in the year 2011 BSE 30 witnessed a decline of more than 23%.
2020: Due to COVID-19 pandemic in the year 2020 BSE 30 lost its value heavily.
And notable years of bull phase can be discussed as follows:
2005 and 2006: Both years witnessed more than 35% growth in the index BSE 30.
2007: in the year 2007 returns of the index was more than 50%.
2009: 2009 was the best year ever. It witnessed more than 75% returns in it.
2017: in 2017 returns were more than 30% due to strong positive sentiments.
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