Tezzbuzz Desk- India's economy has seen major changes in the last several decades and its impact is clearly visible on the country's stock market. Especially after the economic reforms of 1991, the Indian stock market performed brilliantly in the long run. While about 35 years ago Sensex was trading below the level of 1,000, today it has reached around 78,000. This means that Sensex has registered an increase of approximately 8,500 percent during this period. This works out to about 14 per cent annual compound return over the long term.
Sensex was launched in January 1986. A few years later, India started going through a serious economic crisis. In 1991, the country's foreign exchange reserves were very low and the situation was so bad that it could only cover a few weeks of imports. At such a time, the then Finance Minister Dr. Manmohan Singh presented a historic budget in July 1991. The government took many major steps like opening the economy, reducing the license raj, promoting the private sector and easing the way for foreign investment.
During this period, Liberalization, Privatization and Globalization i.e. LPG reforms gained momentum. These policies played an important role in changing the direction of the Indian economy. Its effect was also visible on the stock market. On the day of the budget of 1991 itself, Sensex saw a rise of about 5 percent. The index gave an impressive return of about 82 percent throughout 1991 and by the end of the year it reached a level of around 1,909.
After this the bullish phase in the stock market continued. In the seven months leading up to Dr. Manmohan Singh's next budget in February 1992, the Sensex had risen nearly 94 percent. However, this market boom was not entirely due to economic reforms. During this period, a sharp rise was also seen in the stock market due to the activities of Harshad Mehta. In March 1992, Sensex crossed the 4,000 level for the first time. But this rise did not last long. There was a big fall in the market in April 1992 and on April 28, Sensex fell by about 13 percent. After this, the Harshad Mehta scam came to light, which put a big brake on the stock market boom. The Indian market saw many ups and downs even after this, but the process of economic reforms continued.
In the long term, the expansion of the Indian economy, increasing turnover of companies and increasing participation of investors also had an impact on Sensex. 2024 was a very special year for Sensex. During this period, the index first crossed the level of 75,000, then 80,000 and then 85,000. In 2014, Sensex was around 25,000, while by 2025 it will reach close to 86,000. However, the market does not always move in one direction. Global economic conditions, oil prices, geopolitical tensions, and technological changes influence the AI-related investment market. Despite this, experts' outlook regarding the Indian stock market remains positive in the long term. Sensex's journey from 1,000 to nearly 78,000 shows that despite market fluctuations, compounding has made a big difference for investors in the long run.