Sensex jumps over 1,600 points, investors richer by Rs 7 lakh crore within minutes

The stock market had its own Diwali on the first day of the festival. As trading opened this morning, investors' faces lit up. The result of the election in the US came in, and Dalal Street benefited directly.

The Sensex jumped more than 1,600 points in a single day and stopped at 78,922. The Nifty also rose more than 400 points to reach 24,391. Within minutes of the market opening, investors' wealth rose by Rs 7 lakh crore. The total value of all companies listed on the BSE crossed Rs 500 lakh crore.

The first reason is the US midterm election. The Democratic Party won in both houses of Congress. This is being seen as a big blow for Trump. Earlier, the Indian market had been in poor shape because of the higher tariffs and taxes imposed by Trump and the war in the Middle East. After the Democrats' win, people feel that the US-Israel war against Iran could end soon and that the pressure from tariffs could ease. The market surged on this hope.

The second reason is cheaper crude oil. Brent crude has now fallen to $93.5 a barrel. It had dropped 10 per cent just yesterday. Oil has not been this cheap in the past two months. A country like India gains from cheaper oil because it buys oil from abroad. When oil is cheaper, inflation falls and the country's spending also comes down. The market drew support from this. An expert said oil had earlier been falling slowly but is now falling sharply. If the fall holds, the country's condition will improve further.

The third reason is the return of foreign investors. On Wednesday, foreign investors bought shares worth Rs 72.84 billion in the Indian stock market. This is the fourth straight day they have been buying. Early this year they had sold heavily, which pulled the market down. It now appears they are turning towards India again. Their buying brought money into the market and drove the rise.

The fourth reason is the improving mood within the country. Over the past five days, both the Nifty and the Sensex have risen 5.6 per cent. There has been no such sustained rise in the past five months. Companies' quarterly results are also coming in good, which has raised people's confidence.

In all, four factors came together: change in the US, cheaper oil, foreign money and good results from Indian companies. These gave the market fresh strength. But one thing should be kept in mind. How long the rally lasts depends on oil prices and events around the world. Investors should therefore not get carried away and make wrong investments. They should watch the situation calmly and decide only after that.