Sensex crosses 60,000 mark. 5 key factors that made it possible
Sensex crossed the 60,000 mark for the first time in months on Wednesday (August 17). This has been possible because of a reversal in past brutal trends like stock price crashes, a spike in crude oil prices, and FIIs pulling out their money.
When the stock market index Sensex crossed the 60,000 mark for the first time ever in September 2021, Indian investors celebrated the momentous occasion by cheering for their massive returns and cutting cakes in the hopes of continuing the momentum. But what followed that momentous occasion was a deep fall that continued for a long time.
The Sensex price levels in the last one year
| Timeline | Sensex levels |
| Aug-21 | 57,552 |
| Sep-21 | 59,126 |
| Oct-21 | 59,306 |
| Nov-21 | 57,064 |
| Dec-21 | 58,253 |
| Jan-22 | 58,014 |
| Feb-22 | 56,247 |
| Mar-22 | 58,568 |
| Apr-22 | 57,060 |
| May-22 | 55,566 |
| Jun-22 | 53,018 |
| Jul-22 | 57,570 |
| Aug-22 | 60,172 |
What caused the fall from October 2021 to June 2022: Global events directly impact companies all over the world and influence stock prices. In the last few months, the world has had to deal with the Russia-Ukraine war and its economic impact in the form of:
- Record-breaking high in crude oil prices.
- Higher inflation and food inflation levels.
- Highest fall in the value of the Indian Rupee.
- Fall in global stock markets and much more.
But now that the world economies and the Indian economy seem to be recovering slowly from this impact, a lot of factors are contributing to the Sensex hitting the 60K mark again.
Why has Sensex crossed 60K levels?
1. Oil prices are falling to pre-Russia-Ukraine war levels: International brent crude oil prices were at $70/barrel in November 2021 and were steadily rising since then. When the Russia-Ukraine war began in late February 2022, crude oil prices reached about $90/barrel and kept on increasing to about $120/barrel.
But since June 2022, international crude oil prices started slipping as demand for crude oil fell due to peak prices. Brent crude oil is currently at a 6-month low price of $93/barrel, which is a reason for joy across multiple stock exchanges. This is because we import 3/4th of our oil needs and lower prices mean lower inflation for residents and better margins for paint, tire, and aviation companies.
2. Indian indexes are doing well: Ever noticed how you tend to be happier when you and others around you are happy and excited? This applies to stock markets too.
For the last 2 months starting from June 17, 2022, Sensex has constantly been on the rise. Since Sensex is an indicator of the performance of the underlying 30 Indian stocks, stocks from the auto, oil, gas, and FMCG sectors have done well. Overall, the market has favored the bulls, as prices of 1,707 stocks rose and that of 634 stocks fell on the Bombay Stock Exchange (BSE).
Other indices like the Nifty have also been rising since July 2022. While Nifty was on 16,485 points on July 26, 2022, it is currently trading on 17,936 points on August 17, 2022, and is expected to cross the 18,000 level. 22 of the 43 companies listed on the Nifty 50 index outperformed analysts' expectations for earnings results in the June quarter. The growing momentum of the last 5 weeks has led to consequent gains in the stock market and a push towards the 60,000 level.
3. International stock exchanges are doing well: US stock indices like S&P 500 and Nasdaq have risen from their June lows by 18% and 24% respectively. Nasdaq has been up by 2.4% in the last 1 week and by 15% in the last 1 month. The fact that US inflation has been declining and the confidence that the federal reserve will not have to aggressively raise rates in the coming months is pushing the bull run in the US indices which is indirectly supporting Indian indices like Sensex too.
Most of the Asian markets are also in the green (ie doing well) while Tokyo's stock exchange Nikkei crossed the 29,000 level for the first time in 7 months. Even though global stock indices have a mixed reaction, looks like Sensex is only concentrating on the positive part.
4. FIIs become net buyers: In the last few months, you might have heard the news of how Foreign Institutional Investors (FIIs) were pulling out their money from India which was causing the rupee value to fall to Rs 80/$. While FIIs withdrew around Rs 40,000 crore in April 2022, the amount drastically increased to Rs 54,000 crore in both May and June 2022. Following this, there was news of the RBI Governor Shaktikanta Das holding a closed-door meeting with overseas fund managers in Singapore to help create a soft landing for the Indian economy.
Since July 2022, inflows of foreign capital have helped to boost the currency and domestic equity markets. Foreign Institutional Investors (FIIs) were net buyers in the Indian capital market as they bought shares worth Rs 1,376.84 crore in August 2022 and pumped in Rs 22,452 crore in the first two weeks of August.
5. Other factors: The rupee-dollar exchange rate, which crossed Rs 80 in July 2022, has been consistently below the Rs 80 mark in August 2022. There has been a slower increase in food and fuel inflation in India and since there is a strong growth momentum in the Indian economy, the Sensex seems to be enjoying the bull run.