The BSE Sensex on Friday touched an important milestone, breaching the 60,000-mark for the first time ever as the 30-stock benchmark index continues to rally on the back of expanding Covid-19 vaccination coverage, eased restrictions on business activity and the government’s measures to boost the economy.
Besides, NIFTY, another benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange, was also up by about 100 points to touch the new highs of 17,900 levels.
As per the CEO of Motilal Oswal Financial Services, “Equity market today had a historical day with Sensex touching 60,000 for the first time driven by large caps with many index heavyweights touching new highs.”
“Given rich valuations, one cannot ignore intermittent volatility. However, we expect the positive momentum to continue on the back of improving economic activity and recovery in corporate earnings,” Oswal said.
COVID-19 vaccination coverage, positive global sentiments and favourablep govt policies power the Sensex surge
The significant milestone testifies the resilience of the Indian Inc. that came under strain in the wake of uncertainty wrought by the coronavirus pandemic in early 2020. But a deluge of global liquidity and faster-than-expected earnings recovery from the pandemic lows boosted public sentiments that have driven the markets to scale unprecedented heights.
The Sensex was languishing at the low of 25,638 on March 24, 2020, days after PM Modi had announced a rigorous lockdown to stop the spread of the virus. Since then, the S&P BSE Sensex has surged approximately 134% in a matter of just 18 months, with the last 10,000-point rally coming in just over eight months.
This was the fastest pace at which the Sensex had completed its 10,000-point rally. It took only 167 trading sessions for the stock index to blaze through from 50,000 to 60,000 points. Before this, the index had taken on an average of 931 sessions for a 10,000-point move.
Sensex charts a fastest ever 10,000-point rally, completed its journey from 50k to 60k mark in just over 8 months
To put the gains made by the stock markets in perspective, it is worth noting that it took four and half years for Sensex to touch the 1,000 mark after it was launched in 1986. The Sensex touched the 10,000 mark for the first time in February 2006. It took another 18 months for the next 10,000-point move. The subsequent 10,000-point rally to reach 30,000-mark came after eight years, in March 2015.
An inevitable correction came and the stock markets wavered around for the 30,000 mark for a while before reaching the milestone of 40,000 points in March 2019. The market steadily grew since then but the onset of COVID-19 in early 2020 threw spanner in the works, eroding the hard-earned growth achieved in the last several years.
The Sensex was at 30,000 levels in January 2020 and it touched low levels of 25,000 in March 2020, around the time when India was girding for a pandemic that had first emerged in the central Chinese city of Wuhan in December 2019. However, it took just one and half years for the Sensex to completely shake off the slump induced by COVID-19 restrictions and shutdown, with the 50,000-mark breached in January 2021 and another 10,000 points added in the next eight months.
Stock analysts and pundits predict that if the momentum is sustained, Sensex might touch the 1,00,000-mark by the end of 2022-2023 financial year or roughly eighteen months from now. But they are also wary that the parabolic move in the last few days could lead to short-term correction, driven by investors’s tendency to book profits. Additionally, caution is also advised in the eventuality of a subsequent wave of coronavirus pandemic that could once again disrupt businesses and the country’s overall economic growth.
