As Samvat 2078 Begins, How India’s Stock Market Fared Last Year—In Charts

The mid and small caps beat the larger peers in Samvat 2077 as the stock market scaled new peaks, propelled by easy liquidity, speedier Covid-19 vaccination, economic recovery, better capex cycle and corporate earnings aided by cost cuts and pent-up demand.

The Nifty 50 and Sensex jumped 40% from last Diwali so far, compared with a 69.5% and 80.2% rally in the mid- and small-cap gauges, according to Bloomberg data. Over 86% of the 3,594 BSE-listed stocks gained during the period.

Analysts expect equity performance to sustain because of improved domestic and global demand and government measures. Kotak Securities sees incentives for domestic manufacturing, consumption and private investments to drive markets in the next two years. Axis Securities expects more than 20% growth in the Nifty’s earnings in the next two years. And ICICI Direct estimates Nifty EPS to grow at an annualised rate of 26% over FY21-23.

And as investors wait to make ceremonial purchases after stock exchanges open for about an hour on Thursday, the auspicious trading period called Mahurat, here’s a look at how the market has performed from the last Diwali to now.

‘Emerging’ Euphoria

The Nifty 50 surged 40% between Nov. 14, 2020 and Nov. 2, 2021 compared with a 6.4% and 26.1% gain in the MSCI Emerging Market and MSCI World indices, respectively, during the period.

Healthy foreign inflows pushed the Nifty 50 over 18,000 for the first time in the second week of October 2021. Since the last Diwali, FPIs, according to Bloomberg data, have pumped in Rs 1.38 lakh crore in net equities.

Win Over The World

Indian stock market was the best performer in the Asia Pacific region after Vietnam, Mongolia and Sri Lanka during Samvat 2077, according to Bloomberg data. But the Nifty 50 led major global peers during the year.

Sector Snapshot

Realty gained the most during Samvat 2077, followed by metals.

While the metals index surged due to rising commodity prices; low interest rates, reduced debt levels, and increased transparency propped up the realty gauge.

Leaders And Laggards

Large Cap

Tata Motors Ltd.’s share price was boosted by an electric vehicle fundraise, whereas an increase in metal prices helped Tata Steel Ltd. Improving prospects of finance and insurance subsidiaries placed Bajaj Finserv Ltd., the holding company of Bajaj Finance Ltd., among the top three gainers during Samvat 2077.

Only Hero MotoCorp Ltd. and Dr. Reddy’s Laboratories Ltd. lost during the year. Poor demand and commodity price pressures hurt the nation’s largest two-wheeler maker. Lower profitability and increased costs impacted the drugmaker.

Mid Cap

Adani Total Gas Ltd. gained the most among mind-cap peers from last Diwali so far, aided by increased gas demand. A push toward renewables in the power sector helped JSW Energy Ltd. and and Tata Power Ltd.

Concerns on the U.S. business, on the other hand, dragged Alembic Pharmaceuticals Ltd.’s stock performance during the year. Amara Raja Batteries Ltd. took a hit because of cost pressures and lag in the pass-through of commodity inflation in the replacement market. Petronet LNG Ltd. was impacted due to a surge in spot gas prices.

Small Cap

Robust demand for home textiles after lifting of the Covid-19 restrictions boosted Trident’s share price during Samvat 2077. Production-linked incentives for telecom and networking products helped HFCL Ltd. Balaji Amines Ltd. surged due to an increase in demand for specialty chemicals.

Asset quality issues eroded the market value of Ujjivan Small Finance Bank during the year. Intense pricing pressure in the U.S. hit Strides Pharma Ltd., while lower profitability impacted Astrazeneca Pharma.

Commodity Calls

Supply issues from China and reduced production raised prices of base metals such as copper, aluminum, zinc and nickel. The Bloomberg Commodity Index that covers prices of oil, natural gas, copper, zinc, and other commodities surged more than 41% from last Diwali so far.

Gold prices have fallen on the back of a strong dollar but silver rose due to increased industrial demand. Rising oil prices, however, are likely to reverse the gold price trend due to the risk of inflation.