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India’s Sensex, the benchmark index of the Bombay Stock Exchange (BSE), reached an all-time high on June 21, powered by this year’s accelerated economic growth of the country and a rise in foreign investments.
The Sensex struck a new record high of 63,588.31, smashing the previous high set on December 1, 2022. By the conclusion of the trading day, it had dropped 195 points to 63,523.15. Meanwhile, during the same period, the Nifty 50 index achieved an intraday high of 18,875.90, trailing its all-time high of 18,887.60 by around 12 points. The Nifty index ended the day at a record closing high of 18,856.85.
Apart from India’s Sensex, the S&P BSE MidCap index rose by 0.68% during the same trading day, while the S&P BSE SmallCap index increased by 0.24%, both reaching their all-time highs. Out of the 20 sectors the BSE compiled, six exhibited a decline during the same time frame. As 14 sectors witnessed growth, S&P BSE Utilities and S&P BSE Power saw the most gains.
“While India is striving to realise its economic potential, its equity market is also making big strides. India accounts for more than 15% of the MSCI Emerging Market (EM) Index, up from 6.7% in 2009. It ranks second in terms of weight within the MSCI EM Index, next only to China. For investors, India is quickly becoming a market that is too large to ignore,’ said Eastspring Investments.
India’s Sensex and foreign investments
The surge in India’s Sensex and Nifty indexes corresponds with the country’s economic growth accelerating to 6.1% in the first three months of 2023. This raised the country’s GDP growth rate to 7.2% in the fiscal year that ended March 2023, making it one of the fastest-growing emerging market economies in the world.
“Against an uncertain global economic backdrop, India stands tall today with its sound and robust macroeconomic fundamentals. The economy has come a long way from the era of ‘taper tantrums,’ when it was featured as one of the ‘fragile five’ nations, to now being a flagbearer of resilience amid global turmoil,” writes Huzaifa Husain, Head of India Equities at PineBridge Investments.
“Among India’s sound fundamental indicators, today credit growth for banks is accelerating at a pace never seen before…Indian banks are already seeing improved financials, and now better profitability will enable them to lend more to companies and individuals. In turn, this should aid capital formation and investments…,” he adds.
Besides that, the rise in India’s Sensex and other indices can also be attributed to the rise in flows of foreign capital in the country this year. Foreign investors have invested Rs 738.12 bn ($8.99 bn) in India’s capital markets since April 2023. In the preceding two fiscal years, they were net sellers, with record outflows of Rs 1,400.10 bn ($17.08 bn) in the fiscal year ending March 2023.
