Today’s session will be the last of Samvat 2068, the year which began on October 26, 2011. Samvat 2068 will be remembered for its moderate market gains and consolidation, which reversed the market sentiment and probably laid the foundation for higher returns in Samvat 2069 starting tomorrow.
Markets rose 8.1% in Samvat 2068, a relatively huge improvement over the 17.9% plunge in Samvat 2067, and the third lowest growth in the last ten Samvat years (and the first single-digit one, reflecting cautious optimism).
Samvat 2068 saw investors targeting selective large-cap and mid-cap stocks with sound business fundamentals. Smaller companies did not yield great returns. A DNA Money analysis shows that stock returns of six out of every ten BSE-100 companies rose in Samvat 2068: 62 stocks generated an average return of 26.12%; 37 yielded negative returns of 17.49%.
Most FMCG, cement, pharmaceutical, media and financial stocks gained handsomely. For instance, Tata Global rose 91.76%, the biggest gainer. UltraTech Cement (79.02%), Zee Entertainment (68.01%), Godrej Consumer (61%) and Divi’s Lab (58.76%) stand out for their superb returns.
The return of investor risk appetite over the last four months has helped the market to overcome the lacklustre show early this year, marked by uncertainty in the euro zone and policy paralysis and political logjam in India.
Fears that the bleak scenario may well continue till 2014 were proven unfounded as the situation in both India and Europe, as well as global liquidity, improved in September-October. “There has been a significant improvement in the investor sentiment ever since,” said Dinesh Thakkar, CMD of Angel Broking.
Foreign institutional investors (FIIs) pumped in nearly Rs90,000 crore in Samvat 2068. The broader market, however, didn’t fare too well. Just 60% of all the 2,532 BSE-listed stocks are likely to end Samvat 2068 in the red. South-bound stocks lost 29% on an average; more than 227 BSE stocks lost over 50%.
The new year (Samvat 2069) is likely to be better with corporate earnings nearing bottom, government doing its bit on reforms push and interest rate cuts expected from 2013.
Last week, the India Strategy report of Morgan Stanley noted three fundamental changes in India: ebbing policy inertia, receding macro stability tail risks and priced-in stagflation-type economy. “Our view is that the market is forming a base for the next bull market. We see 23% upside to the Sensex to end-2013 at around 23069 levels.” the report stated.
Any easing of interest rates may also lead domestic retail investors and mutual funds to invest more in Indian markets in the coming months, the report noted. The domestic mutual funds have been net sellers of equities worth `13,000 crore since the last Samvat (2067).