The SENSEX-(or SENSitve indEX) was introduced by the Bombay stock exchange on January 1 1986. It is one of the prominent stock market indexes in India. The Sensex is designed to reflect the overall market sentiments. It comprises of 30 stocks. These are large, well-established and financially sound companies from main sectors.The method adopted for calculating Sensex is the market capitalisation weighted method in which weights are assigned according to the size of the company. Larger the size, higher the weightage. The base year of Sensex is 1978-79 and the base index value is set to 100 for that period. Whereas NIFTY is an Index computed from performance of top stocks from different sectors listed on NSE (National stock exchange). NIFTY consists of 50 companies from 24 different sectors. NIFTY stands for National Stock Exchange’s Fifty. The companies which form index of NIFTY may vary from time to time based on many factors considered by NSE. NIFTY is for NSE similarly SENSEX is for BSE.
Current Scenrio of Stock Exchange
The Indian stock markets are moving towards a fresh life time high at Nifty at 9008 level and Sensex at 29593 . In current session, Healthcare and Oil & Gas index were in the focus, surges by more than 200 points each. Mid-caps and Small-Caps also closed in green territory, up by 100 points each. The Sensex and Nifty registered fresh lifetime high levels in trades on today bolstered by a surprise repo rate cut by the Reserve Bank of India. The 50-share Nifty opened 120 points higher at 9,116 and the BSE benchmark Sensex surged 431 points to 30,015. Reserve Bank Governor Raghuram Rajan today announced a surprise repo rate cut, the second inter-meeting interest rate cut in less than two months. Repo rate has been reduced by 25 basis points or 0.25 per cent to 7.5 per cent with immediate effect. The move comes days after Union Budget announcement. In his Budget, it had loosened the reins on public spending to drive growth, but promised lower-than-expected borrowing despite raising the fiscal deficit target. Boosted by the rate cut, rate sensitive stocks came in demand and were witnessing buying. Banking, capital goods and real estate stocks were the leading sectoral gainers on the BSE. The Indian stock markets are moving towards a fresh life time high at 9008 level.
Factors resposible for change in indian stock market :
Stock market always reacts for appropriate news. Like merger announcement, this news will impact more if the merger is related to foreign company,its a positive news – stocks may rise.Demerger announcement will have negative impact – negative news – stocks may fall Merger and Demerger announcement may have major impact on Indian Stock Stock markets reacts in the Same way in case of market.Acquisition (takeover) Announcement. Similarly expansion plan , political news , sector news also affects the stock exchanges.
B) Impact of Other Asian Market
Most of the time it has been observed and studied that Indian Market (Nifty/Sensex) follows other Asian markets and USA markets. Asian markets like China – Shanghai’s market, Japan – Nikkei market, Hong Kong – Hang Sung market.Above all Asian markets “open” early than Indian market. Most of the time Indian market will follow this Asian markets. If these Asian markets open in positive and lead to positive direction than the Indian markets will react in the same manner and vice-versa provided that there is no major news in India.USA market – USA markets like NASDAQ and DOW will also have major impact on Indian market.
C) Quarterly Results –
Quarterly results declared by all Indian Companies will have major impact on that company and hence their stocks in Indian stock market. Every company declares its quarterly results. If any company declares extra-ordinary results that will definitely affects its stocks. Most of all stock traders concentrate on much profit and target sales that company had made. If company achieved good profit than they declare dividend, bonus stocks etc. This will make positive impact on stocks of that company.
D) Fundamental News
Fundamental news means companies own news. Companies own news means future turnover announcements, any change in director body, future releases etc. If the company has good fundamentals like board of directors, companies expansion plans, future acquisition etc then its worth to invest in such companies for long term.
E) Inflation Rate –
Inflation rate is prices of consumer goods. This rate is declared by Government for every week at Friday (weekend) 12.00 pm. The inflation rate indicates what the wholesale price was for that week. If it is low As compared to previous week, then it is positive news and you may see stock prices going up and if the rate is higher as compared to previous week, then it is negative and this may affect stock prices negatively and stock prices may come down. So keep a watch. Inflation rate declare by Indian Government at every Friday 12.00 pm and trade accordingly.“Indian stock market reacts to inflation rate”.
Relationship between economy and stock market
Often share price movements are reflections of what is happening in the economy. E.g. a fear of a recession and global slowdown could cause share prices to fall. The stock market itself can affect consumer confidence. Bad headlines of falling share prices are another factor which discourage people from spending. On its own it may not have much effect, but combined with falling house prices, share prices can be a discouraging factor.
If we talk about incestment Falling share prices can hamper firms ability to raise finance on the stock market. Firms who are expanding and wish to borrow often do so by issuing more shares – it provides a low cost way of borrowing more money. However, with falling share prices it becomes much more difficult.