Read the following passage and answer the question.

Neeru, the finance manager, and Mani, the managing director of ABCD Ltd., were discussing how to raise funds for modernizing their existing plant. Neeru suggested using equity, pointing out that the Sensex has risen by 6,000 points in the last 4 years. However, Mani wanted to choose debt as the source of finance. The company has high operating costs over time.

Identify the factor highlighted in below lines which affects the decision.

'Sensex has risen by 6,000 points in the last 4 years.'

Stock market condition

The correct answer is option 3- Stock market condition.

The factor highlighted in the line "Sensex has risen by 6,000 points in the last 4 years" directly relates to "Stock Market Conditions."

When the stock market, as indicated by the Sensex, is performing well (rising in this case), it generally creates a favorable environment for raising equity finance. A rising Sensex suggests that investor confidence is high, and companies may find it easier to raise funds by issuing shares, as investors are more likely to invest when the market is performing well.

In this context, the increase in the Sensex is a reflection of positive stock market conditions, which might encourage a company to prefer equity financing for its modernization plans, as investors may be more optimistic and willing to invest in the company’s shares.