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Current Affairs

Sensex driving up

Date: 10 October 2020 Tags: Miscellaneous

Issue

The benchmark Sensex at BSE crossed closed above the 40,000 mark and has been holding on to the gains.

 

Background

 Over the last six trading sessions, the Sensex has risen by 2,209 points or 5.8 percent and closed at over seven-month high of 40,182.67.

 

Details

  • In its policy statement the RBI Governor said that several high-frequency indicators are pointing to the easing of contractions in various sectors of the economy.

  • Better than expected numbers on various economic fronts has driven the rally. If the strong vehicle sales numbers for September was one, TCS announcing a strong performance for the quarter ended September lifted the stock prices of leading IT companies.

  • The E-way bills jumped 10 percent in September and the power demand too has witnessed a double-digit growth.

  • Rail freight in the last 10 days of September rose by 19 percent and the Pharma market grew 4.5% in September.

  • As all these numbers indicate a better than expected uptick in the economy, the stock markets have been responding to the same. 

  • The decline in COVID-19 cases over the last week has come as a big positive for the markets. With declining numbers, there has been further easing in lockdown restrictions and the central regulations now permit nearly all activities.

  • This is expected to further provide strength to the restoration of economic activities across the country and will help sustain momentum in the stock markets.

  • Investors, however, need to be careful with stock picking as a number of companies may be trading at expensive valuations.