Summary: Wavelet based concepts have been employed to study two ‘strongly correlated’ financial time series of BSE and NSE indexes using index data from April 1990 to March 2006 by decomposing index based financial time series into time-scale components using the MODWT (Maximal Overlap Discrete Wavelet Transform) analysis. The results have clearly established that MODWT based time scale decomposition analysis gives better results than the Fourier transform based spectral analysis of BSE and NSE indexes financial time series.