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01-01-2010, 02:02 AM #1
Bulls came storming back to Indian equities markets
Putting behind the worst annual performance ever, Indian equities were on a roll in 2009, catapulting a key index by more than 80 percent, to close the year with one of the best gains among emerging markets.
At closing bell Thursday, the 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was ruling at 17,464.81 points with an impressive gain of 7,817.5 points, or 81.03 percent, over the previous year's close at 9,647.31 points.
This was the best annual performance since 1999 and was in sharp contrast to 2008, when the Sensex ended with a hefty loss of 10,639.68 points or 52.45 percent making it the third-worst performing equities index among emerging markets.
The story was no different at the National Stock Exchange (NSE), the other major bourse in the country, where the broader 50-scrip S and P CNX Nifty gained a hefty 2,241.9 points or 75.76 percent when it closed at 5,201.05 points Thursday.
"After the major battering equities markets sustained the previous year, Indian indices have since recovered superbly," Dinesh Thakkar, chairman and managing director of brokerage firm Angel Broking, told IANS.
The main factors that made key indices rise like a Phoenix was resilience of the Indian economy and impressive growth despite global slowdown that also reflected in corporate earnings and the return of the foreign institutional funds.
According to markets watchdog, the Securities and Exchange Board of India, such overseas funds pumped about USD 17.46 billion into the Indian stock markets in 2009, as opposed to a net sale worth USD 13.135 billion for the first time in over a decade.
"The performance in 2009 surpassed the expectations of even the most optimistic person. There were not many places left for foreign funds to invest and India was among the few attractive destinations," said Jagannadham Thunuguntla, equity head at SMC Capitals.
Even as the Sensex gained 7,817.5 points, some of the 13 sector-specific indices stood out because of their performance -- the metals index appreciated the most, up 233.68 percent, while auto followed with a gain of 204.16 points.
Similarly, the indices for information technology was up 132.78 percent, capital goods gained 104.26 percent, consumer durables rose 97.8 percent, banking gained 83.9 percent, state-run enterprises inflated 80.54 percent, power moved up by 74.3 percent.
On the whole, the year started on a promising note with the government unveiling a second dose of fiscal stimulus to help the economy weather the adverse impact of a slowdown in the global economy -- touted as the worst in eight decades.
As a result, the Sensex rallied till Jan 6 and gained 7.13 percent in just three days of trading. But then came the confession of a multi-million dollar fraud by Satyam Computer founder B. Ramalinga Raju, triggering a 7.25 percent fall in just one session.
Till February, the barometer index was oscillating between 9,000-odd points and 10,300-levels. But as signs of a prolonged economic recession receded the world over, Indian equities found more takers and reflected in steady rise in the index.
By the beginning of May it was trading comfortably around the 12,000-point mark and gave a thumping welcome to the electoral victory of the Congress party-led United Progressive Alliance -- that even saw suspension of trading as indices hit the upper circuit twice.
On that eventful day of May 18, the Sensex stood at 14,284.21 points, gaining 2,110.79 points, or 17.33 percent, over the previous close, while Nifty also rose 17.3 percent, or 636.4 points, to close at 4,308.05 points.
The remaining months of the year saw a steady rise in the index with interim corrections even as events like the presentation of an industry-friendly national budget and a high growth for the economy during the second quarter boosted investor sentiments.
Looking at individual stocks that go into the Sensex basket, the top five gainers during 2009 were Tata Motors, up 398.33 percent at Rs.792.60; Mahindra and Mahindra, up 293.23 percent at Rs.1,080.80; Sterlite Industries, up 230.45 percent at Rs.861.65; Hindalco, up 211.23 percent at Rs.160.75; and Maruti Suzuki, up 199.88 percent at Rs.1,559.65.
Only three stocks ended lower -- Bharti Airtel was down 54.02 percent at Rs.328.80; Reliance Communications was down 23.92 percent at Rs.172.90; and Reliance Industries which ended lower since the company declared a 1:1 bonus.
Looking ahead, the markets expect some more action once the government's divestment programme gets underway even as investors have their fingers crossed on when the Sensex will breach the magical 21,000 mark.
"The outlook for 2010 is pretty bright though its performance may not be as exciting as it was in 2009. A combination of factors such as low interest rates and huge domestic demand will ensure India's growth story remains intact," Angel Broking's Thakkar said.
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