The Rise And Rise Of The Sensex

Stock Markets

- M.G. Arun

On September 24, the Bombay Stock Exchange (BSE) Sensex touched 60,000 points, a new high and yet another exhilarating moment for the Indian stock markets, which have been unusually buoyant for the past few months. The rise of the Sensex this year follows big slumps last year—on February 28, 2020, as Covid-19 cases began to rise, the market saw one of its worst single-day crashes, losing 1,448 points to close at 38,297; on March 23, again, it recorded its biggest fall ever—3,935 points—after the Centre announced the national lockdown.

However, by the latter half of 2020, it was climbing again—back at 45,000 in December and past 50,000 points on January 21 this year. From then on, it took the Sensex just eight months to add another 10,000 points: on September 27, the Sensex closed at 60,077. Even though only five of the 30 stocks in the benchmark index reportedly accounted for over half of the 10,000 point rise, experts say the buoyancy is broad-based.

So, what explains this buoyancy in the stock market in the midst of the seemingly endless travails of the Indian economy? Last year, India saw its first recession in four decades, with the economy ending fiscal 2021 with GDP growth at (-)7.3 per cent. There is still massive unemployment, as the MSMEs (micro, small and medium enterprises) and India’s large informal sector struggle to reboot.