A few companies are seen dominating the sectors they are operating in, a review of the different sectoral indices of the Bombay Stock Exchange has revealed.

The domination is noticed not in terms of sales but in terms of market capitalisation and weightage commanded by a few companies in the sectoral indices.

Almost following the 'Rule of Three' concept referred to in the management books which states that three companies tend to have dominant market share in any given sector, the sectoral indices of BSE are dominated by the big three companies. A big movement in the share price of these companies make impact on the value of entire sector.

In case of capital goods sector, the BSE calculates the price movement of 22 companies. However, only three companies, namely-- Larsen and Toubro, Bhel and Suzlon Energy [Get Quote] together have as much as 68 per cent weightage in the index.

In case of metal index where the BSE tracks movement of 17 companies, only three companies, namely, Tata Steel [Get Quote], Sterlite Ind and Hindalco [Get Quote] together have 56 per cent weightage in the index.

In the oil and gas sector where the BSE index tracks movement of 11 companies, only two companies, namely, Reliance [Get Quote] Ind and ONGC [Get Quote] account for 70 per cent of the weightage.

The so called rule of three principle applies to other sectors like information technology where Infosys [Get Quote], Satyam [Get Quote] and TCS [Get Quote] have 77 per cent weightage, in automobiles, where Tata Motors [Get Quote], Mahindra and Maruti [Get Quote] have 55 per cent weightage, in reality where DLF, Unitech and Indiabull Rel together have 75 per cent weightage, in consumer durable where Titan, Blue Star [Get Quote] and Videocon [Get Quote] account for 79 per cent of the weightage.

Even in case of banks, three banks namely, ICICI Bank [Get Quote], State Bank and HDFC Bank [Get Quote] have 70 per cent weightage. In pharmaceutical sector four companies, namely, Ranbaxy [Get Quote], Cipla, Sun Pharma [Get Quote] and Dr Reddy's together have 50 per cent share.

Commenting on the phenomenon, Dr Prakash Hebalkar, a leading management consultant, said the BSE sectoral indices are based on market capitalisation. What is needed to be seen is whether there is any economic domination where the companies are able to control the prices in the market for their products and services.

He also pointed out that oil and gas, power and metals are licensed sectors. You need government licence to operate in these sectors. In case of metals like steel, no licence is required for steel making but a licence is required for mines which gives raw material for steel.

He said some sort of domination is expected in the licensed sectors. In other sectors, one should see whether there is economic domination, he added.