NEW DELHI: Domestic benchmark indices continued their bullish streak on Friday with the BSE sensex crossing yet another milestone of breaching the 60,000-mark.
After scaling an intra-day high of 60,333, the 30-share BSE index jumped 163 points or 0.27 per cent to close at fresh peak of 60,048. While, the broader NSE Nifty settled 30 points or 0.17 per cent higher at new record of 17,853.
Equity indices have been on an upward trajectory ever since the massive slump that was experienced in March last year when the nationwide lockdown to curb the spread of Covid-19 virus made investors cautious.
From falling to a level as low as 25,000, the sensex made a significant jump to scale mount 60,000 in 1.5 years.
So far, the year 2021 has belonged to the bulls as markets have scripted many historic feats. The benchmark index has gained over 25 per cent so far this year.
Congratulating the investors on this achievement, BSE CEO Ashish Chauhan tweeted on the journey of sensex and how the index faced many uncertainties over the years.
https://t.co/hAfT5ZyEgd— Ashish Chauhan (@ashishchauhan) 1632456412000
31 years = 60,000 points
The BSE index hit 1,000-mark on July 25, 1990. It took a little over 31 years for the sensex to traverse from 1,000 level to the famed 60,000 level now.
It took 9 years to cross the 5,000-mark as the BJP-led coalition government won majority in the Lok Sabha on October 11, 1999.
The index took another 7 years to scale the next 5,000 points to breach the 10,000 level in February 2006.
On October 29, 2007 it scaled the 20,000 level, then on March 4, 2015, the benchmark hit the 30,000-mark.
In the next 6 years, the BSE index jumped to cross the 50,000 milestone in 2021.
50,000-60,000 in eight months
The sensex breached 50,000-mark for the first time on January 21 this year.
It closed above this mark for the first time on February 3. Since then the index has made several records from hitting 51,000-mark in intra-day trade on February 5 to 59,000 level on September 16.
Interestingly, the number of sessions taken to breach each subsequent 1,000 level has been reducing.
It took the sensex just 166 sessions to gain its latest 10,000 points, compared with the 414 sessions it took to cover the previous 10,000.
The month of August has been a remarkable one for the benchmark indices.
Majority of the gains witnessed by both the sensex and Nifty have occurred during the month of August.
The sensex very comfortably took a leap from the 54,000-mark at the start of the month to finish at a level that’s over 57,000.
This means the BSE index soared over 9 per cent in August itself.
Resilient to Covid shock
The sensex has more than doubled from its pandemic lows hit March 2020, to become one of the best performers among major markets during the period.
The BSE benchmark sank a massive 8,828.8 points or 23 per cent during that month as concerns over the pandemic impact on the economy ravaged investor sentiments.
The BSE benchmark had gained 15.7 per cent in 2020, after facing a roller-coaster ride during the year hit by the pandemic.
M-cap at all-time high
The market capitalisation of BSE-listed companies reached an all-time high of Rs 261.76 lakh crore on Friday.
Driven by the rally in the equities, the market capitalisation of BSE-listed companies jumped Rs 3,19,825.16 crore to in the last 2 days to reach Rs 2,61,76,421.38 crore.
Record number of retail investors
The world-beating stock rally is fueled by millions of first-time investors, willing to buy riskier assets as the central bank’s record-low policy rates reduce returns from traditional saving avenues like bank deposits.
Small investors have pumped in more money into stock markets in the last year than they have ever done.
Retail investors — those with investments of up to Rs 2 lakh – cumulatively owned 7.18 per cent of all listed companies on the National Stock Exchange (NSE) in the June quarter this year. That’s a record and an increase from their 6.96 per cent holding in the March quarter.
Factors that led to the rally
This remarkable uptrend in the stock markets can be attributed to several factors.
Here’s a look at some:
* Rapid Covid-19 vaccination drive
India started its massive vaccination drive against the Covid-19 virus from January 16, 2021.
So far, over 84 crore people across the country have been vaccinated against the virus.
Nearly half of all eligible adults have received at least one does of the vaccine, which includes over 90 per cent of the elderly population.
India aims to vaccinate its complete adult population by the end of this year.
New infections in India have held steady since about July, with the bulk of cases coming from just two states. The pace of vaccinations has picked up, with almost 45 per cent of people having received at least one dose and 15 per cent fully vaccinated.
* Resumption of business activities
As the second wave of Covid-19 wanes, a good resumption has been witnessed in business activities. The rapid pace of vaccination has also given the confidence to corporates to resume work from office in a graded manner.
Most states have lifted lockdown curbs, improving prospects for businesses’ demand and profits ahead of the key festival season starting next month.
India’s manufacturing sector activities also witnessed a rise as business orders and production rose at a steady pace. Factory orders and output rose across the consumer, intermediate and investment goods categories, indicating an overall improvement in operating conditions.
Meanwhile, services activity grew for the first time in four months to 1.5 year high in August as vaccine access improved footfall as several establishments reopened.
* Positive global cues
The global markets have remained largely buoyant off late. Positive cues from global markets have played a major role in pushing domestic markets to record highs.
Investors cheered the US Federal Reserve’s stance on tapering stimulus and raising interest rates.
The Fed said on Wednesday it could begin reducing its monthly bond purchases by as soon as November, and that interest rates could rise quicker than expected by next year. The November deadline was largely priced in by markets.
The S&P 500 posted 26 new 52-week highs and four new lows; the Nasdaq Composite recorded 97 new highs and 47 new lows.
Besides the possibility that China’s Evergrande Group can avoid a messy default aslo influenced investor sentiments globally.
Asian market sentiments also remained in the positive zone.
* Strong corporate results
In the first quarter of FY22, India Inc posted strong rise in both revenues and net profit, indicating a healthy recovery.
India Inc has reported a doubling of profit after tax in FY21 despite a 5% dip in the top line on the back of a lower tax rate and a sharp drop in interest costs.
Reliance Industries has been the biggest winner so far with its stock gaining over 25 per cent this year.
Earnings for India’s top 50 companies are estimated to rise 27 per cent in the current financial year.
* Expectations of economic recovery
India witnessed a massive 20.1 per cent rise in its gross domestic product (GDP) for the quarter ended June 2021, mainly due to a low base effect.
As economic activities witness an uptick, many experts have expressed there is strong possibility that the Indian economy recovers faster than expected.
The Indian economy contracted 7.3 per cent in the 2020-21 fiscal but is expected to clock double-digit growth during the current fiscal ending March 2022 on the back of rapid vaccination and demand coming back across sectors.
* Sustained foreign fund inflows
India has emerged as one of the most favoured destinations for global fund managers with foreign portfolio investment (FPI) inflows into equity markets totalling Rs 2.74 lakh crore in 2020-21.
Nearly 26 per cent of total FPI equity (foreign portfolio investment) inflow in India over the past 30 years came in 2020-21.
Besides, foreign direct investments (FDI) into the country more than doubled to $20.42 billion during the April-July period of the current fiscal, the commerce and industry ministry data showed.