Food items that are part of an essential commodity are of great concern to every person on our planet Earth. Therefore, the availability of these foods, both physical and economic is of great importance. At the same time, to be accessible to the maximum number of people is also an upcoming challenge. The oldest stock exchange in the Asian continent, ie the BSE located in Mumbai, which was established at the end of the 19th century, is considered as an indicator of the market sentiment prevailing in the Indian economy. Use SENSEX, ie Sensitivity Index as an indicator. Represents the performance of the 30 best companies according to M Cap (market capitalization). These 30 companies are selected in such a way that SENSEX as a whole represents the entire economy. It is essential to consider SENSEX on the NSE of NSE because it uses 1978-79 as a base year, thus providing fluctuations and variations in the market more accurately.
The entire stock market around the world acts as a barometer, thus influencing the decision of the investor to direct or not to invest in the respective countries. On the national side, the stock market alerts investors of upcoming opportunities and challenges.
Agriculture as a primary activity has a lasting effect on almost all successive activities in the secondary and tertiary sectors, regardless of their nature (positive or negative). Therefore, the production and price of agricultural products, especially food, leaves its mark on the entire economy. The stock that derives its value from food items is considered as an indicator of the condition of the agricultural sector in the economy.
There is a two-way relationship between SENSEX and actual food availability in the market. Both affect each other, ie if there is an increase in the index can be expected that the available supply of food products is able to balance their demand. On the other hand, if there is a drop in the index, demand may be exceeding the food supply, leading to the undesirable condition known as food inflation. Thus, SENSEX can be both the cause of inflation on the one hand and the result of inflation on the other.
SENSEX being an index associated with several sectors, indicates the situation of these sectors as a whole. In order to deduce the cause and effect relationship with respect to the individual sectors, other details are also necessary to be considered and studied. The government should initiate this methodology to avoid any undesired and undesired market sentiment, as this may lead to inadequate market volatility, which, coupled with unfavorable weather and global turmoil may further worsen the situation.
Thus, it can be concluded that SENSEX in one way or another affects food inflation, but it is not the only one that does. Care should be taken that the indicators are in accordance with the actual market conditions.