Stock prices dance to US Fed tune: The Nifty50 rose 14% in 2021

Since the outbreak of the pandemic, the US Fed's balance sheet has risen 76 per cent from $4.2 trillion in March 2020 to $ 8.2 trillion on Wednesday

The rally in the stock markets appears to be tied to the size of the US Federal Reserve’s balance sheet, rather than anything else, according to data.

Major equity indices across the world, including the BSE Sensex and Nifty50, have nearly doubled from the lows hit in March 2020, closely tracking the expansion in the US Fed’s balance sheet and the liquidity in the global financial markets.

For instance, the S&P 500 index — the world’s most traded equity index — has risen 16 per cent since the beginning of calendar year 2021, closely mirroring the 12 per cent rise in US