BSE's benchmark index Sensex rose over 500 points on 8 October to 40,468.88. Despite Sensex being nearly 4 percent down from its record high seen in January this year, the market capitalisation of listed firms on the BSE touched a record high of Rs 161 trillion.
The rise in market cap despite Sensex's complete recovery goes to show that the rally post the dramatic slump in March has been supported by non-index stocks or smaller stocks. From its March lows, BSE Midcap has advanced 53 percent, BSE SmallCap has climbed 71 percent while BSE 500 has risen 55 percent.
Benchmark indices Sensex and Nifty 50 have gained around 54 percent each in this period. Financial stocks which have a high weightage on Sensex and Nifty have remained under pressure.
Banking and finance company stocks have been trading considerably lower than their January highs as the sector is expected to be hard hit by the slowdown in economic activity due to COVID-19.
The most recent gains in the stock markets are due to a combination of factors which include positive PMI data and an expectation that RBI will maintain its dovish stance amid high inflation and a possible contraction in economic growth.
In the monetary policy outcome of the MPC meeting that will be out on 9 October, most economists are expecting RBI to keep the repo rates unchanged.
Further, analysts are expecting business sales to pick up in the October-December quarter due to festivals and weddings.