Sensex’s journey to Mt 56K: A look at top-9 events

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Domestic markets extended their historic highs with the Sensex scaling 56,000 for the very first time on August 18. Following the upbeat sentiment, the market capitalisation of BSE-listed companies reached its all-time high of Rs 2,42,08,041.64 crore. Since its inception, with 1978-79 as the base year (Sensex level 100), the bellwether index has rewarded the long-term investors handsomely. On July 25, 1990, the Sensex touched the four-digit figure for the first time and closed at 1,001 after a good monsoon and excellent corporate results.

During the morning trade, the 30-share BSE benchmark index jumped 312.44 points to its lifetime high of 56,104.71, continuing its winning run for the fifth session in a row.

Here’s a look at factors during the journey:

July 1991: Manmohan Singh’s liberal budget

In the wake of a balance of payments crisis and double-digit inflation, on 24 July 1991, Manmohan Singh announced measures to liberalise the Indian economy in his budget. This budget will always be remembered as the one that changed India forever. In the next two months, Sensex rallied 29% (from 1,488 to 1,916 pts), ending the year just shy of the 2,000-mark.  It crossed 2000, 3000 and 4000 marks in 1992 following the big band reforms.

August 1992: Harshad Mehta scam

The post-economic liberalisation era witnessed one of the most notorious scams which shook the Indian financial system and what is now commonly known as the Harshad Mehta scam or the securities scam. It involved a fraud of around Rs 4,000 crore, which led to a massive crash in the Indian stock market. The scam first became apparent in late April 1992, and sent the Sensex from 4,546 points at the start of April, to 2595 points by the first week of August – a drop of 43%.

The BSE Sensex started its journey again after as many as eight years and crossed the 5000 mark for the 1^st time in the year 1999 . The Indian markets crossed the 5,000-point mark in October 1999 as the National Democratic Alliance won the 13th Lok Sabha elections and formed a stable government under Atal Bihari Vajpayee. A technology boom ensured that the Sensex rose by 63% till the end of 1999 since the beginning of the year. Sensex hit the 6000 mark in 2000. The 7000 mark was crossed in June and the 8000 mark on September 8 in 2005.

2008: Global financial crisis

The global financial crisis resulting in recession in major developed countries caused the Sensex to fall by over 50% during 2008-2009. From around 21,000 levels seen in the beginning of 2008, the index crashed to near 8,000 till March 2009. Markets tumbled as foreign investors, who took a big hit back home due to the financial crisis (recession), needed their money and subsequently pulled back their investments from India. The index saw its biggest fall since 1992 on 24, October 2008.

2009: UPA wins second term

The Sensex saw its biggest inter-day gain on May 18, 2009 in a buoyant reaction to the then ruling United Progressive Alliance (UPA) coalition’s decisive electoral win in the Lok Sabha elections. For the first time in Indian market’s history, trading was halted for the day due to markets hitting the upper circuit limit. The Sensex was locked at 14272.62 up 2099.21 points or 17.24 percent. Similarly, the Nifty was locked at 4308.05, up 636.40 points or 17.33 percent. The election results ignited hopes among investors for a stable government with less interference by regional parties that would push reforms to lift the slowing economy

May 2014: NDA wins with Narendra Modi as PM

In May 2014, the Sensex crossed record 25,000 level for the first time, a new record high on the back of a landslide victory for the Narendra Modi-led Bharatiya Janata Party on 16 May, 2014. The Lok Sabha elections, which resulted in the Bharatiya Janata Party getting a simple majority on its own as well as PM Modi’s pro-business image, caused the markets to rally by over 8% in May 2014. The next event in the NDA rule was the launch of The Goods and Services Tax (GST). It was India’s biggest tax reform, which was launched on July 1,2017 replacing a slew of indirect taxes with a unified tax structure. After its implementation, the Sensex gained by over 10% till the end of the year.

May 2019: NDA wins second term

In May 2019, the Sensex crossed record 40,000 mark for the first time after NDA’s victory in the Lok Sabha election in 2019. Investors expected that with the NDA government winning a second term, there would be political stability and a majority government would be able to take decisions easily and carry on with reforms. The subsequent corporate tax cut announced in September 2019 ensured that markets remained on an upward trajectory as it hit new all-time highs in January 2020

March 2020: Covid-induced lockdown

On March 23, 2020, Sensex shed 3,936 points to drop to 25,981 due to the coronavirus-induced lockdown that hit the financial markets hard. All the sectoral indices ended bleeding red, with banks and financial indices plummeting the most. Markets tumbled as investors remained worried about the uncertainty over the novel coronavirus disease outbreak and pulled out money from equity markets. The Sensex lost around 40% from its peak in mid-January 2020 till March 2020. The index saw its sharpest inter-day decline of 13.15% on March 23, 2020, a day before PM Narendra Modi declared a nationwide lockdown

The comeback of Sensex began in April 2020, going through a bumpy ride on the back of government introduced stimulus measures.

Jan 2021: Vaccine rolled out 

On 21st January 2021, the BSE Sensex crossed 50,000 mark for the very first time in history as the gauge extended its longest weekly winning streak in over a decade. The Sensex has nearly doubled from its lows in March and has risen nearly 50 times in three decades — the benchmark was on 999 on January 1, 1991.

February 2021: Union Budget fuels rally

Indian equities gained the most on a budget day since 1997 after Finance Minister Nirmala refrained from announcing any major tax hikes. BSE benchmark Sensex zoomed over 1,700 points and the NSE Nifty reclaimed the 14,000-level driven by gains in financial stocks post the budget speech on Feb 1, 2021.

On February 8, 2021, the BSE Sensex crossed 51,000 mark for the first time and the markets continued their surge  as on 15th February 2021, the Sensex crossed 52,000 level for the first time. On 23rd June 2021, the Sensex crossed 53,000 mark for the first time and on 4th August 2021, the BSE Sensex touched 54,000 mark for the very first time.

Benchmark indices scaled new peaks on August 13, 2021 with the BSE Sensex and the NSE Nifty topping the 55,000-mark and the 16,500-mark respectively on positive economic data.

It’s been fast and furious. Four sessions is all that took the Sensex to zoom 1,000 points—the 30-pack index found 55,000 on August 13 and hit 56,000 intraday on August 18, with a weekend in between.

This is the fastest 1,000-point rally of 2021. The Sensex moved from 50,000 to 51,000 in 10 sessions and took six to reach 52,000. The next 1,000 points were hard work and came after 85 sessions. The journey from 53,000 to 54,000 took 30 sessions but 54,000 to 55,000 was a sprint of seven sessions.