Why Sensex is Rising
performance of the Sensex, India's leading stock market index, has been exceptional, as it continues to break records with benchmark indices consistently smashing one record after another. Despite the inherent volatility and unpredictability of the stock market, the index has showcased remarkable resilience, gaining 1.8% in the past five days. As a result of this, the market capitalisation of companies listed on the Bombay Stock Exchange (BSE) have also experienced an unprecedented surge, currently standing at a staggering ₹298.57 trillion (tn) (US$ 3.65 tn).
Let's find out what is driving the rally. The surge in foreign portfolio investor (FPI) inflows into the Indian market has played a pivotal role in driving the Sensex to record highs. In June, India experienced a significant boost in foreign portfolio investors' (FPIs) inflows, marking it the strongest month in the past ten months.
FPIs injected a substantial amount of ₹471.5 bn into the Indian equities, signifying their confidence in the country's improving macroeconomic fundamentals. Notably, this is the fourth consecutive month in which FPIs have ended as net buyers in domestic stocks. To provide some context, FPIs made investments of ₹438.4 bn in May, ₹116.3 bn in April, and ₹79.4 bn in March.
In contrast, they withdrew ₹52.9 bn in February and ₹288.5 bn in January. Overall, FPIs have injected ₹764.1 bn into the Indian market during the first half of 2023. Additionally, FPIs also allocated around ₹92 bn into the debt market in June.
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