Sensex is an index that gives an idea of the movement of share prices.
When it goes down, opposition and Leftists claim that the economy is in bad shape. When it goes up, opposition and Leftists claim that it benefits only the rich. Let us leave them to their schizophrenia and discuss Sensex instead.
So what exactly Sensex says on a given day?
Ups and downs of speculative components even out over long intervals. In the long run, the expected sum of dividends in future decides the price graph of a share.
The share price of a share is the sum of all the future dividends expected from that company on its shares. If a person holds a share, he may sell it to meet a need for cash, or he may sell it fearing that the company is not doing well and dividends will decrease. The buyer may have the opposite opinion of the company. (For all the “analysis,” the share prices are ultimately subjective values.)
Then there are speculators and gamblers in the share market also. They may jack up prices or depress them to entice the gullible and the greedy. So, a share price carries a speculative component also. Ups and downs of speculative components even out over long intervals. In the long run, the expected sum of dividends in future decides the price graph of a share.
So, if share prices are rising, it means people can see that the companies are doing well. If they are going down and down, it means people feel companies will decline.
In the first case, people will invest in the economy. In the second case, they will hold their savings to themselves.
So, a rising Sensex means that there will be more investment. More investment means that more poor will get a job, more children of farmers will get a job. As people will become richer, they will demand new things and services, and so new kinds of jobs will appear. They will eat more and varied items, so the demand for farm products will grow in size and in variety. So farmers will benefit even more.
If Sensex goes down, the opposite will happen. Jobs will shrink and the poor will be hit the hardest. Farmers’ children will get no non-farm work. They will get poorer.
So, contrary to what your resident झोलावाला, the scotch drinking thug, the Leftist, tells you; Sensex actually affects the poor and the farmers the most.
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