The year 2009 turned out awesome for the Bombay Stock Exchange as punters saw wealth doubling to over Rs. 60-lakh crore as foreign investors parked their faith as well as money in the world’s second fastest growing economy. It ended the year at 17464.81, up 7817.50 points (81 per cent) from the year-ago level. It was up 120.99 points on Thursday over Wednesday’s close of 17343.82, mainly driven by market leader Reliance Industries and IT major Infosys.
After opening with a 139-point rally, the Sensex touched a high of 17530.94, before closing at 17464.81 as the latest food inflation data that touched nearly 20 per cent slightly dented the momentum towards the latter part of the session. However, capital goods and refinery stocks supported the market.
The National Stock Exchange index, Nifty, improved by 32 points to close at 5201.05. It touched a high of 5,221.85.
During the year, starting on a slow note, the stock market was hit by a purple patch with the re-election of the UPA Government in May and shares gained leaps and bounds from thereon.
Market analysts predict the rally in stock market would continue in the year 2010 with the benchmark index Sensex expected to scale back its record 21000-level by the end of the New Year.
“Today, India is a preferred destination for equity investors across the world as is evident from the foreign institutional investment (FII) and foreign direct investment (FDI) inflows ($35 billion) into the market this year,” ICICI Securities chief Madhabi Puri Buch said.
Analysts too are optimistic about the gradual return of stock prices to the January 2008 level (21000) once the 17500-resistance is breached with high volume. The market had reached its record high of 21206.77 on January 10, 2008. “This year is a historical one by any standard and we have not seen stock market doubling in so short span of time nor have we seen the stock market recovering so sharply right after a serious almost 65 per cent fall from the top and wiping out a major chunk of the losses in just nine months timeframe,” Ashika Stock Brokers’ Research Head Paras Bothra said.
Stimulus helps
The stocks mostly derived strength from the government’s fiscal packages announced over since October 2008 and through the early parts of 2009 and sustained capital inflows. India recorded 7 per cent growth in the first-half of this fiscal, thanks to increased manufacturing activity. Foreign institutional investors (FIIs) have bought shares worth over Rs. 80,000 crore, a record high. However, a possible dampener could be a hike in interest rates by RBI, which is meeting in January to review its monetary policy stance.
HDFC Securities Head (Private Broking and Wealth Management) Vinod Sharma said, “The year 2009, as a whole has been a year of education ... it has taught the investors to buy when a great sale is on and sell when the profits are there for the taking. Not every investor has actually bought at lower levels. It also bestowed on the participants huge profits, which will shore up their risk taking ability going forward.”
During the year, the market grew by more than 80 per cent and many investors even saw multiplying of the worth of their portfolios.
In absolute terms, the total investor wealth measured in terms of the cumulative market capitalisation of all the listed companies nearly doubled from about Rs. 31-lakh crore at the beginning of the year to more than Rs. 60-lakh crore as 2009 came to an end.
The Sensex had slipped to as low as 8047.17 on March 6, 2009, and more than doubled from this level as the year drew to its close.
Similarly, the National Stock Exchange’s Nifty index, another benchmark index, surged to its highest level of the year at near 5200 representing an over two-fold surge from the lowest level of the year at 2539.45 that was hit in the initial months of 2009. It is also fast approaching towards its all time peak of 6357.10, which was scaled in January 2008.
Moreover, the stock market got a renewed lease of life as foreign institutional investors, who had fled from the emerging markets in 2008, started to look again towards Indian equities as valuations turned attractive.
The FII investment hit a record level of over Rs. 80,500 crore in 2009, the highest-ever inflow in rupee terms in a single year. FII inflow so far this year has broken the previous high of Rs. 71,486 crore parked by foreign fund houses in domestic equities in 2007.
Market analysts believe that the FII inflow in India may continue in the next year as well, if the liquidity conditions remain strong.
Economic recovery
“With the economic recovery in place, corporate earnings are expected to hasten from here on. Further, we believe that the Indian equities would continue to remain at the radar of global investors. We expect the markets to touch 21000 level by December 2010,” Angel Broking Sarabjit Kour Nangra (Vice-President-Research) said.While, Purpleline Investment Advisors Director P. K. Agarwal said, “I do not think market will reach 25000 (Sensex) in 2010, it will at best test its previous high of around 21200.”
