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Thursday, February 25, 2021

Sensex’s journey to 50,000-mark: From economic liberalisation to Covid pandemic

The Sensex has now nearly doubled from its 52-week low of 25,638.9 hit on March 24, 2020.

By: Express Web Desk | New Delhi |
Updated: January 22, 2021 2:57:48 pm
At the Bombay Stock Exchange on January 21, 2021. (Express Photo: Ganesh Shirsekar)

India’s oldest stock market benchmark S&P BSE Sensex breached the 50,000-mark on Thursday (Jan 21). The index surged 391.89 points and hit an intraday record high of 50,184.01. The Sensex has now nearly doubled from its 52-week low of 25,638.9 hit on March 24, 2020.

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The recent rise in the BSE benchmark has been triggered by foreign portfolio investors (FPI) buying. Between April 1, 2020, and January 21, 2021, the FPIs have invested a net of Rs 2,41,021 crore into Indian equities, the highest ever in any year. The prospects of a bounce-back in the Indian economy and reopening after coronavirus-led nationwide lockdowns have boosted investor confidence during the previous quarter.

Here is Sensex’s journey to 50,000-mark

1. From 1,000 to 10,000 mark

Source: BSE

The Sensex breached the 1,000-mark for the first time in 1990. The journey from 1,000 to 10,000 of the Sensex was eventful. In 1991, Prime Minister Rajiv Gandhi was assassinated, India was going through a balance of payments (BoP) crisis and Finance Minister Manmohan Singh opened up the Indian economy to foreign companies. The Sensex was largely in a range of a little over 1,000 points (refer to the graph above by BSE).

Harshad Mehta scam

Stock broker Harshad Mehta. (Express archive photo by Vivek Bendre 15.7.93)

The market witnessed one of its first major financial frauds in the form of a stock market scam by stock trader Harshad Mehta in 1992. In a span of nearly a year, Sensex had rallied from around 1,200 to a record high of 4,467 and fell sharply after the scam was busted.

Bombay blasts

1993 Bombay blasts (Express archive photo)

The blasts across the city of Mumbai on March 12, 1993, affected the routine trading as one of the bombs took off at the BSE building, but there was no major impact on the index. The Sensex was somewhere 2,300-2,400 points during these times.

NDA victory, Kargil war

Army Jawans display weapons during celebrations of 20th Kargil War anniversary in Drass. (Express Photo by Shuaib Masoodi 24-07-2019)

In 1999, the country fought the Kargil war and Sensex touched 5,000 for the first time led by a boom in technology (IT) stocks.

Ketan Parekh scam, Parliament attack, 9/11 attack

In 2001, the stock market was plagued with a scam by Ketan Parekh, the Gujarat earthquake, terrorist attacks in India’s Parliament and the 9/11 terrorist attack in the US. The benchmark index lost its 5,000-mark and ended the year at 3,262.33.

UPA victory

Prime Minister Manmohan Singh (Express Photo by Rohit Jain Paras)

In 2004, Sensex saw a month-on-month decline of nearly 16 per cent when the UPA government won the Lok Sabha elections and Manmohan Singh became the prime minister but slowly bounced back to end the year at 6,602.69.

2. From 10,000 to 20,000 mark

A couple of years later in early 2006, it touched the 10,000 points-mark for the first time due to a boom in commodity prices in the global markets. In late 2007, Sensex breached the 20,000-mark propelled by liquidity in the global market.

Mumbai attack, Global financial crisis, Satyam scam, Commonwealth games scam, 2G scam

In a short span of time, Sensex came under severe pressure due to the global financial crisis of 2008 which triggered a world market crash and global depression. Another scam hit the Sensex in 2009 when Satyam’s chairman and CEO B Ramalinga Raju stepped down following his admission to cook up the company’s accounts to the tune of nearly Rs 7,100 crore.

File photo shows Satyam Computer Chairman B Ramalinga Raju reacting during a discussion at India Economic Summit in New Delhi on Sunday, 16th Nov 2008. (PTI Photo)

Sensex during the financial year (FY) 2008-09 (April-March) saw a year-on-year fall of 37.94 per cent and ended at 9,708.50.

The Taj Mahal Hotel on fire as rescue operations continued 24 hours after the terrorists went in. (Express archive photo by Prashant Nadkar. 27.11.2008)

In 2008, the country had also witnessed the ghastly terror attack on Mumbai, the financial capital of India. 

In late 2010 and early 2011, the market was again marred with Commonwealth (CWG) and Telecom (2G) scams but the impact was comparatively lesser as the Sensex was still recovering back slowly to its pre-global financial crisis levels. The Sensex ended FY 2012 at 17404.20, down 10.5 per cent from 19,445.22 in FY 2011.

3. From 20,000 to 40,000

NDA victory under Narendra Modi

Prime Minister Narendra Modi (Express Photo by Vishal Srivastav)

The benchmark rose to a new high when the NDA government won the Lok Sabha elections and Narendra Modi was sworn in as the new prime minister in 2014. The Sensex had touched 25,375.63 in May 2014. It steadily inched higher and touched the 30,000-mark In March 2015.

Demonetisation and GST

When Prime Minister Narendra Modi announced currency demonetisation in November 2016, the Sensex fell 4.57 per cent month-on-month to end at 26,652.81. The goods and services tax (GST) was implemented on July 1 2017 by Finance Minister Arun Jaitley under PM Modi’s government. During this month, Sensex gained 5.15 per cent on-month to end at 32,514.94.

Union finance minister Arun Jaitley addressing media after 31st GST Council meeting at Vigyan Bhawan in New Delhi on 22.12.2018. (Express Archive photo by Praveen Khanna)

2018 was rocked with two financial scams. The Punjab National Bank scam which came to light in February 2018 and the Infrastructure Leasing & Financial Services (IL&FS) scam which was discovered in September 2018. Needless to say that both these scams shocked the stock markets momentarily, however Sensex still managed to register a gain of 5.91 per cent on-year and ended 2018 at 36,068.33.

Hitting 40,000

Sensex touched the 40,000-mark for the first time ever in May 2019 on the day the NDA government won its second term. In late half of 2019, Finance Minister Nirmala Sitharaman announced a corporate tax cut to boost the slowing economy which provided further momentum to the Sensex which inched to a record high 41,809.96 by December 2019.

Coronavirus, the stock market crash and recovery

However, in March last year, the Sensex slumped to its multi-year lows of 25,638.90 in March 24 after Prime Minister Narendra Modi imposed a nationwide lockdown to curb the spread of coronavirus (COVID-19). But subsequently phased re-opening of the economy ignited the sentiments of an economic revival with market participants betting on recovery and improvement in corporate earnings.

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