35-year record broken! Stormy rally in the stock market; investors strike gold.

Business: Before Diwali, there has been tremendous growth in the Indian stock market. This rise in Sensex and Nifty has brought a smile on the faces of investors. In just seven trading sessions, the Sensex rose by 10.6 percent, while the Nifty also registered a gain of 10.27 percent. This rise in the market is also special because in the last 35 years, such a big rise in the Sensex was not seen before Diwali. The continuously growing market has once again created enthusiasm among investors.
Many important reasons are believed to be behind this rise in the stock market. These include the return of foreign institutional investors, fall in crude oil prices, positive signals from global markets, strong buying by domestic investors and expectations of better performance of companies. These factors together have strengthened the Indian market. Let us know the five big reasons for the rise in the market.

1. Return of foreign investors to the market
   The biggest reason for the rise in the Indian stock market is believed to be the withdrawal of foreign institutional investors (FIIs). For some time now, foreign investors were continuously withdrawing money from the Indian market. Due to this, there was pressure on the market and fluctuations were seen in the major indices. However, now the attitude of foreign investors seems to be changing.
   Cash flow in the market has strengthened due to increased purchases by foreign investors. When foreign investors buy shares of Indian companies in large quantities, it increases demand in the market and supports the share prices. Sensex and Nifty have strengthened especially due to increase in investment in banking, IT, financial services and companies with large market capitalization. Investors hope that this inflow of foreign capital can support the market further.
2. Relief from fall in crude oil prices
   India fulfills a major part of its requirement through import of crude oil. In such a situation, the fall in crude oil prices in the international market brings relief to the Indian economy. Due to cheaper oil, the country’s import bill may reduce and the pressure on foreign exchange reserves is likely to reduce.
   Apart from this, reduction in the cost of petroleum products can also reduce the expenses of transportation, production and many industries. This increases the hope of improvement in the profits of companies. Cheap crude oil can also prove helpful in controlling inflation. This is the reason why the fall in oil prices is being considered a positive sign for the stock market. Investors hope that this may benefit the earnings and economic activities of Indian companies.
3. Positive signals from global markets
   The Indian stock market is also affected by the movements of the world’s major stock markets. Indian market also gets support due to positive environment in America, Europe and Asian markets. The confidence of Indian investors has strengthened due to reducing investor concerns regarding the global economy and increased buying in major markets.
   Apart from this, the possibilities arising regarding interest rates at the international level also influence the decisions of investors. If expectations of softening of interest rates increase globally, investors may be attracted towards riskier investment options. Emerging markets, especially fast growing markets like India, can benefit from this. Positive signals from global markets have strengthened the bullish sentiment in the domestic stock market.
4. Strong buying by domestic investors
   The continuous support of the Indian stock market from domestic investors is also a major reason for the rise. The market is getting strengthened due to increase in investment in the stock market by mutual funds, insurance companies and retail investors.
   Participation of people making regular investments in mutual funds through Systematic Investment Plan (SIP) has also supported the market. Even during selling by foreign investors, domestic institutional investors continued buying on several occasions, which helped prevent a major decline in the market.
   It is also natural for investors to increase their interest in the market before festivals like Diwali. However, the rise cannot be considered permanent just because of the festive atmosphere. To strengthen the market, it is necessary to improve the investment and actual performance of companies.
5. Increased confidence in companies’ results and economy
   The improving expectations regarding the earnings of companies also play an important role in the rise in the stock market. Investors assess a company’s business, sales, profits and future prospects before investing money in its shares.
   If the quarterly results of companies are better, then purchasing of their shares may increase. The market keeps an eye on the performance of companies in banking, automobile, IT, FMCG and financial sectors. Along with this, the expectation of domestic demand, spending on infrastructure and strength in economic activities in the country also increases the confidence of investors.
   Given the growth prospects of the Indian economy, domestic and foreign investors are looking for long-term opportunities in the market. This positive sentiment is supporting the market rise.
   What is the signal for investors?
   This rise in Sensex and Nifty before Diwali is an encouraging sign for the market. The Sensex’s 10.6 percent rise in seven trading sessions is said to be the biggest pre-Diwali rise in the last 35 years. However, after such a sharp rise, the possibility of profit booking and fluctuations in the market is not ruled out.