SENSEX AT 66,000: HISTORY IN MAKING

The Indian benchmark index touched 66,000 levels for the first on Thursday and has been trading around the same levels on Friday afternoon. 

Sensex has already delivered 7.5% returns since January 2023. Yesterday, the US market closed on a high after US consumer inflation cooled more than expected to 3% in June. Let us look at the journey of Sensex and what has led to the recent rally.

Sensex journey

Sensex was first introduced on January 1, 1986, with a base value of 100. In its early years, the index witnessed modest movements. The early 1990s marked a turning point for the Indian economy with the initiation of economic liberalization and market reforms. The Sensex started gaining prominence. 

The late 1990s witnessed a significant bull run in the Indian stock market. The Sensex saw exponential growth during this period, reaching several milestones and attracting a large number of retail investors. The technology sector, in particular, experienced a boom. The dot-com bubble burst in the early 2000s had a severe impact on global stock markets, including the Sensex. After the dot-com bubble burst, the Sensex embarked on a recovery phase. It regained its lost ground and entered a period of consolidation. 

The global financial crisis of 2008 had a substantial impact on the Indian stock market. The Sensex experienced a sharp decline, reflecting the negative sentiment and economic uncertainties prevailing worldwide. The period from 2014 to 2018 witnessed a significant bull run in the Indian stock market. It crossed the 30,000 mark for the first time in 2015 and continued its upward trajectory.

The outbreak of the COVID-19 pandemic in early 2020 had a severe impact on global economies and financial markets, including the Sensex. The index experienced extreme volatility and witnessed a sharp decline, reflecting the uncertainties surrounding the pandemic and its economic fallout. However, it also witnessed a remarkable recovery from the lows and touched 66,000 levels in July 2023.

The recent rally

With the cooling inflation in the US, it is expected that US Fed may stop the interest rate hikes, which is a big positive not only for the US market but Indian market also. In India, though retail inflation based on Consumer Price Index (CPI) increased to 4.81% in June after declining for four consecutive months, it remained within RBI's comfort zone. There have also been sustained inflows from foreign institution investors (FPI) in the last few weeks.

With all the positives, heavy buying is seen in the IT stocks like Infosys and TCS because of better-than-expected recent results reported by some of the major IT companies. There is positivity in the market in anticipation of buoyant Q1 results and low volatility. The market direction could be decided by results from the financial companies starting with HDFC Bank on Saturday.