Sensex crossing 51k is still winning half the battle

With the beginning of the rollout of vaccine against Covid-19, the country's economy is showing green shoots, and the capital market has touched historic heights

It is visible by the Sensex' kissing the 51k mark on the very RBI policy day and the market capitalisation of BSE-listed companies' crossed the historic Rs 200 lakh crores mark for the first time.

Of course, it was driven by a continuous rally in the market due to the flawless inflow of FIIs, the market-friendly Budget and good financial results for Q3 being shown by the listed companies. Market mandarins are going gung-ho on this and they have now predicted that the Sensex may try the magical level of 55K too, in near future, in case it continues to progress at the current pace.

It all has helped the BSE's becoming the world's ninth largest exchange in terms of market capitalisation. It's the fact that merely within a short span of four days, the 30-share BSE benchmark gained 4,328.52 points.

While traversing its journey from 549 to 50,000, the Sensex, up 91x, has delivered 13.6 per cent CAGR returns in the last 35 years.

Not to mention that the journey has not been a cake walk at all. Rather, it was full of challenging times like Asian financial crisis, dot com bubble, Global financial crisis and the latest being the Covid pandemic.

Now, there comes a word of caution. Going further is going to be tough and the capital market is all likely to pass through volatile phase.

A good number of penny stocks have also seen an appreciation of their share prices in this 50k orgy. However, as their fundamentals are not strong, they may lose their value in 'fly by night' manner' giving a big jolt to the retail investors. It was of late that the BSE had delisted at least one such stock, while another stock exited from the stock exchange voluntarily on the same grounds.

The coming days would see volatility continue on global cues as the new US president Joe Biden has just taken over and he will take some time before he opens his cards to give us a clear-cut idea about his vision. So, Sensex may see some upheavals before the dust finally settles down.

Back home, we have to see how the ongoing disinvestment programme of the government takes shape. It will all have its bearing impact on the market.