Indian stock market benchmarks Sensex and Nifty closed at record highs on Tuesday amidst Gross Domestic Product (GDP) numbers highlighted a lower than expected contraction in the quarter ended in September. Today, at 13,109.05, the Nifty 50 index closed up 1.08 percent, while the Sensex benchmark surged more than 500 points to 44,655.44. It is pertinent to note that since Indian recorded its worst-ever GDP numbers for a quarter in June quarter due to strict lockdown, the indices at Dalaal Street have reached new heights.

As per a report in the financial daily, Mint, in November the indices have jumped more than 11 percent. So why is the stock market hovering at its highest level, even when the economy is plummeting in recent times? What is fuelling the Bull Run even when the Indian Economy is in Technical Recession? Let's find out.

Bombay Stock Exchange
Bombay Stock ExchangeINDRANIL MUKHERJEE/AFP/Getty Images

Huge FPIs inflow in the last two months

For the second consecutive month in November, foreign portfolio investors (FPI) remained net buyers by pumping in a whopping Rs 62,951 crore on Indian markets. For the equity segment, the numbers are significant, since the FPI data was made available by the National Securities Depository Ltd, this is the highest amount of money invested.

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Indian pedestrians walk on Dalal Street - Trader's Street - next to the Bombay Stock Exchange (BSE) in MumbaiINDRANIL MUKHERJEE/AFP/Getty Images

Between November 3 and 27, FPIs invested a net of Rs 60,358 crore in equity and Rs 2,593 crore in the debt category, bringing the total net investment to Rs 62,951 crore. For the comparison, in October, FPIs were net buyers with Rs 22,033 crore.

Why are FPIs investing in India?

A report in the Economic Times highlights that since the potential payoff in emerging markets is much greater, global investors tend to invest in emerging markets rather than developed markets. A similar pattern can be witnessed in emerging markets like South Korea and Taiwan.

India Coronavirus update
The World Health Organization has said India's relatively low mortality rate could rise as the virus fans out to the vast countryside, where health facilities are basic at best.Reuters

Other reasons for the better performance of Sensex

One of the other reasons attributed to the rise in the indices at Dalaal Street is hope for a COVID-19 vaccine that has boosted the sentiments of investors. Economists are also of the view that better than expected GDP numbers and consistency in GST revenue figures are also reasons why Sensex is soaring.