Here’s why the BSE Sensex index sits at ATH as the rupee slips

The BSE Sensex index has rallied hard this year and has reached to a record high of ₹80,000, making it one of the best-performing indices. Its rally has done well as it bottomed at ₹25,656 as the Covid-19 pandemic started. 

Why the Sensex has soared

The BSE Sensex, which is made up of 30 companies, has joined other indices in a strong rally. It has also rallied in line with the performance of the Nifty 50 index, which has also jumped to a record high.

Other global indices that have surged to a record high are Topix, Nikkei 225, Nasdaq 100, and the S&P 500 indices. 

It has jumped because of the ongoing demand of Indian stocks as the volume has soared. Recent data revealed that this volume is averaging over $21 billion and the number is growing.

Another report by the FT showed that the notional value of options on the Nifty 50 index has been averaging $1.64 trillion a day. That figure is substantially higher than the $1.4 trillion traded in Wall Street. 

Indian options have done well because of the fast-growing trend of zero-day options, which are used to hedge against short-term market moves. Stock market influencers have also helped to drive this demand.

Further, the index has jumped sharply because of the ongoing rebound of the Indian economy, which has become a shining star globally. Economists expect the data to show that the economy expanded by 8% this year.

The stocks have also risen as investors anticipate that the Reserve Bank of India (RBI) will start cutting interest rates later this year or early in 2025. The bank’s challenge is that the country’s inflation has remained stubbornly high. 

Indian rupee crash

The BSE Sensex index has also done well because of the ongoing Indian rupee crash. The USD/INR was trading at 83.52 on Thursday, near its all-time high of 83.71. It has also risen by over 15% from the lowest point in 2021. 

Therefore, while many Indians have moved to foreign currencies, others have moved to stocks to hedge against the currency crash and inflation. 

The Indian rupee has dropped because of the relatively hawkish Federal Reserve, which has pointed to just one rate hike this year. 

Top Sensex index stocks

Most companies in the Sensex index have done well this year. The best performer in the index was Mahindra & Mahindra, which has soared by more than 68% this year. 

Power Grid, a leading utility company, has also done well, rising by more than 41% this year, helped by strong earnings and growth. 

State Bank of India (SBI) stock price has jumped by more than 30% this year while Tata Steel has soared by 27%. The other top-performing companies in the index are the likes of Sun Pharma, Tata Motors, Tech Mahindra, and Bharti Airtel. 

BSE Sensex index analysis

Sensex chart by TradingView

The weekly chart shows that the Sensex index has been in a remarkable bull run in the past few years. Most recently, it moved above the upper side of the rising wedge pattern, a popular bearish sign.

The index has remained above all moving averages, meaning that bulls are still in control. Also, the Relative Strength Index (RSI) has soared above the overbought level while the momentum indicator has continued rising.

Therefore, based on trend-following principles, the path of the least resistance is to the upside. If this happens, the next point to watch will be at ₹80,130, which is higher than the current ₹80,130. 

The next catalyst for the BSE Sensex will be the upcoming earnings by most of its constituent companies.