Why Is Sensex Rising? Exploring the Reasons Behind The Sudden Spike

The Indian equity markets have been on a rollercoaster ride this year. After a stellar start to the calendar year, things are not looking good for the investors right now. The benchmark BSE SENSEX is currently trading around 3890 points; almost 10% lower than its peak hit in September last year. However, there are some good news as well: Sensex has crossed 3800 mark again and is currently at 3915 points. The small-cap CNX index has also started reviving from its bearish phase with a return of +9% in October after dropping by -19% this year so far. The performance of Indian stock markets lately has been quite volatile with frequent ups and downs. This article will help you understand why the Sensex has risen recently and what are the key reasons behind it.


Key Reasons Behind The Recent Rise In Sensex


Sensex rising



The sudden rise in the index has been attributed to some key factors, including recovering crude oil prices, an unexpected revival in the Chinese equity markets, and interest rate hikes by the US Federal Reserve. Indian equity markets have been significantly impacted by the global crude oil prices. Crude oil is an important source of raw materials for several Indian industries, and a decline in crude oil prices has been a major reason for the decline in Indian equity markets. The rise in crude oil prices from $59 per barrel in May to $74 per barrel in October has been largely responsible for the sudden rise in the Indian equity markets. The Chinese equity markets have also been a rare bright spot in an otherwise dark sea of global equity markets. The Chinese equity markets began to recover from their prolonged phase of decline from July this year. The unexpected recovery of Chinese equity markets has been a key reason for the sudden rise of Sensex lately. Likewise, a few interest rate hikes by the US Federal Reserve in the recent past have also been a key reason for the sudden rise in the Indian equity markets.


Reliance Industries (RNRL) : A Rare Bright Spot In a Dark Sea


Reliance Industries (RNRL) has been a rare bright spot in a dark sea of Indian equity markets this year. Currently, the stock is trading at Rs. 593 per share, almost 20% higher than its price in May when the Indian equity markets were trading at their peak. The stock has been on a consistent upward journey since the last 3 months. The company reported a nine-month profit of Rs. 22,694 crores. This was a significant increase from the profit of Rs. 15,232 crores reported for the same period last year. The average daily crude oil prices during the nine-month period were also higher compared to the same period last year. Thus, the increased profit from Reliance Industries can be attributed to higher crude oil prices.


Semiconductor Manufacturing Company Limited (SMEC) : Staying On The Right Side of the Equation



SMEC is one of the rare stocks that have been consistently performing well since the beginning of the year. The company designs and manufactures semiconductor equipment and related products for the global semiconductor industry. The stock is currently trading at Rs. 985 per share, more than double its price in February this year. It is currently the most profitable stock in BSE 500. SMEC has reported a consistent profit from its operations throughout the year. For the nine-month period ending in September, the company reported a profit of Rs. 13,278 crores, which is an increase of +27.7% from the same period last year. The company also expects its profits to increase significantly in the coming months.


Infosys: Hiring, Hiring and Hiring!


The IT sector has been on a hiring spree across the globe, and India is no exception to this. The IT sector in India is currently at the peak of its hiring cycle, and most IT companies are looking to hire more employees. This is one of the key reasons behind the sudden rise of the Indian equity markets. For the nine-month period ending in September, the average daily crude oil prices were higher compared to the same period last year. Thus, the increased profit from the IT sector can be attributed to higher crude oil prices.


HDFC Bank: Rising Interest Rates Are Good for Banks


HDFC Bank has been on a consistent upward journey since the last couple of months. Currently, the stock is trading at Rs. 2,200 per share, more than double its price in March this year. HDFC Bank has been consistently reporting a rise in its net interest income every quarter. The average daily crude oil prices for the nine-month period ending in September were also higher compared to the same period last year. Thus, the increased profit from HDFC Bank can be attributed to higher crude oil prices.


Hero MotoCorp: There's More to Come from This Hero!


Hero MotoCorp is one of the oldest and most reliable automobile companies in India. The stock has been consistently on a rise since September this year. Currently, the stock is trading at Rs. 4,675 per share. The company reported a significant rise in its net profit for the nine-month period ending in September. The average daily crude oil prices for the same period were also higher compared to the same period last year. Thus, the increased profit from Hero MotoCorp can be attributed to higher crude oil prices.


Conclusion


All in all, the sudden rise in the Indian equity markets is a good thing for the investors. However, things might turn worse again, as the equity markets are highly volatile and unpredictable. Hence, it is advisable that you invest only what you can afford to lose.

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