The contest for the top slot

For the past two decades India has been a fast-growing market. The returns on equity and capital employed of Sensex companies have always been among the best in global markets. However, the Sensex seems to have been losing its sheen over the last ten years. The Sensex yielded an RoE of 28 per cent in FY05. It has reduced to 14 per cent in FY15. Similarly, the return on investment was 29 per cent in FY05. It has come down to 16 per cent in FY15. Sensex's RoE and RoCE Financial YearRoE (%)RoCE (%)2014-1514.1215.872009-1020.56182004-0527.5928.59 Emerging market RoE CountryIndicesFY14 RoE (%) IndiaS&P Sensex16.17IndonesiaJakarta Composite12.99ChinaShanghai Se Composite12.96TaiwanTaiwan Taiex11.53South KoreaKopsi6.6BrazilBrazil Ibovespa5.06Source: Business Standard So, does it mean that investors in the India story have a reason to worry? Should they start looking for new avenues to get the maximum bang for their buck? Not really. The reason behind the falling returns is the presence of commodity and capital goods sector in the Sensex. These two sectors have a high weightage in the Sensex and therefore the fall in their earnings has impacted the Sensex returns. In the table below, you can see how the companies in these two sectors have witnessed a constant f