Sensex enters New Year on optimistic note; surged 3,000 points

India's robust economic growth and record overseas investments helped the stock market add about Rs12 trillion to investor wealth, as the BSE benchmark Sensex gained over 3,000 points during 2010.

As the stock market closed on a bullish note on the last day 2010, with a 120.02 point surge in Sensex today, the benchmark index rose by 3044.28 points for the entire year.

In the process, the total investor wealth, measured in terms of cumulative market capitalisation of all listed companies, rose to Rs72,96,725.14 crore, from Rs60,79,000 crore at the end of 2009. During the period, the Sensex rose from 17,464.81 points on December 31, 2009 to 20,509.09 points today.

Besides, during the decade ended today, the total investor wealth grew over 10-fold from about Rs7,00,000 crore at the end of the year 2000. The Sensex registered nearly five-fold rise over the 10-year period.

"The barometer of Indian capital markets Sensex has moved up five fold from 4,000 to 20,000 in this decade and the FII investment, which was Rs6,200 crores in the year 2,000, has surpassed Rs1,00,000 crore in 2010," Unicon Securities vice-president research Madhumita Ghosh said.

Market experts said the key driving forces behind the market rally this year, when the stocks rose by an average of over 17%, were impressive FII inflows as also the continuing robustness of domestic economy, which inched closer to the 9% annual growth level.

"In 2009-10, in lieu of the global meltdown Indian market showed better resilience due to stricter banking norms and robust domestic demand. We showed faster recovery and reverted to to GDP growth of closer to 9% in FY10," Globe Capital PMS head KK Mittal said.

The year also saw the Sensex hitting its record closing level of 21004.96 points on Diwali day, November 5. However, the record-breaking bull run continued only till Diwali, and consolidation, marked with bouts of sluggishness, was seen on the bourses in the last two months of 2010.

It was mostly negative news flow from the global markets that limited the surge on domestic bourses to a modest level of about 15.3%.

While the performance of the country's most valued firm Reliance Industries was not up to the mark, a number of other blue-chips, mostly from auto, banking, pharma and IT space, performed well.

Some of the key stocks that gave impressive returns to investors included Bajaj Auto, Tata Motors, TCS, Hindalco, M&M, ICICI Bank, HDFC Bank and SBI.

"Auto sector benefited from rising local demand and strong growth in exports, while the banking sector had a huge positive run and but for the last quarter’s stagnation, it would have been the best performing sector in India," MAPE Securities head of research Kislay kanth said.

Those with negative returns for the year included RIL, Maruti, NTPC, DLF, RCOM and SAIL.

Realty counters got badly hammered during the year on the negative news flow, with the sector emerging as the worst performer among the 13 sectoral indices.

Besides, the telecom sector was hit by the 2G spectrum scam and subsequent investigations. Experts said the sector is likely to get a boost only with the successful rollout of 3G services.

Despite all the ups and downs during the year 2010, India's was among the best performing stock markets in the world.

Marketmen said that the global economic revival, which began in 2009 and was confirmed in 2010, is set to continue in the new year and the Sensex is likely to breach 24,000-mark in 2011. However, they cautioned that pressure in the form of higher inflation and interest rates may act as spoil-sport.