THE RISE OF SENSEX – how and why?

The morning of 21st January,2021 came in as a thunderbolt as the Sensex index crossed the historic 50,000 point mark in intraday trading,an all time high on the D- street.Despite of the impaired economic slowdown, and the pandemic on one sight, it has been able to reach the high it couldn’t in the past 30 years.

WHAT LED TO THIS RALLY?

1) GROWTH DESPITE THE PANDEMIC

The Reserve bank of India‘s last financial stability report (FSR) pointed out the divorce between the stock market and the real economy,which was cushioned by three factors. A- abundant liquidity in the banking system. B- Lowering down the cost of funds. C- Regulatory forbearance in the asset classification of specified loans amid the pandemic.

2) RELIANCE’S CONTRIBUTION

Reliance is a lion share contributor to the Sensex, with a hold of about 16% of the total index in it’s hands. And as the long dispute over the Future group-Reliance was settled and given SEBI’s approval the exact same day,it was obvious for the market to go high.

3) GEOPOLITICAL SURGE

The sudden surge in the geopolitical environment,with Joe Biden swearing in as the U.S president with his promised stimulus of 1.9 trillion dollars has quite much improved the confidence in the markets as the money is definitely expected to be flowing towards Indian companies too.

4) IT AND HEALTHCARE

Over 2020, these two sectors have outperformed themselves. Till thr august of 2020,due to the pandemic and digitisation, the information technology stocks surged about 47% and the healthcare stocks surged over 57%, changing the index from time to time.

5) MINOR FACTORS

Apart from these, liquidity boost, low rate regimes and a healthy corporate earning profile by the index heavy weights kept the markets resilient throughout the years.

6) CONFIDENCE IN THE ‘21 BUDGET

Less than 10 days away,there is a huge excitement in the market due to the upcoming fiscal year budget,with the finance minister calling it a one ‘never like before’

OVER 30 YEARS- THE HISTORY

2 JANUARY,1986

Launch with the base index value of 100.

Year 1992

Harshad Mehta scam pushed the market down immediately while the introduction of the LPG policy surged it back up.

Year 2000

Due to the technology boom improved the market’s conditions, leading to a 5,000 point on the scale.

6 FEBRUARY 2006

Sensex crosses 10,000 mark which took the most time, about 549 sessions.

29 OCTOBER 2007

The Sensex crossed a 20,000 mark followed by a boom in 2008.

YEAR 2009

A hit due to global financial crisis.

YEAR 2015

With Narendra Modi swearing in as the prime minister and the boom afterwards,the sensex crossed a 30,000 mark which took about 1820 sessions.

23 MAY 2019

The index crossed 40,000 with just about 1042 sessions of trading.

And finally,in less than a year and just 415 sessions, it crossed the 50k mark,in midst of the pandemic. The pre- covid rise was just about 13% while the post covid rise was a whopping 24% crossing the 50,000 level. It’s journey has sure been a remarkable one.