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Rise In Sensex Reasons : Increased Foreign Portfolio Investments

Increased Foreign Portfolio Investments:

The Sensex has risen 11.36%, post-Union Budget 2021-22 presentation, due to increased Foreign Portfolio Investments (FPIs).

  • Sensex, otherwise known as the S&P BSE Sensex index, is the benchmark index of the Bombay Stock Exchange (BSE) in India.
  • It comprises 30 of the largest and most actively traded stocks on the BSE and is the oldest stock index in India.
  • A stock is an investment that represents a share, or partial ownership, of a company. Corporations issue (sell) stock to raise funds to operate their businesses.

Reasons for Inflow:

  • Increased Liquidity
  • Post Covid Recovery
  • Performing Sectors
    • Sectors like private banks, Fast-Moving Consumer Goods (FMCG), and Information Technology (IT) have seen foreign flows as Indian companies have exhibited resilience and demonstrated growth post-lifting of the lockdown restrictions.
    • In 2020, the pharma sector was a preferred choice and the sector did very well.
    • The Banking stocks underperformed due to potential Non-Performing Asset (NPA) concerns. Now, the banking stocks are again sought after by the FPIs.