Benchmark indices ended the year 2021 on a strong note, with Sensex and Nifty clocking gains in the last trading session. Driven by a gush of liquidity, low returns from other asset classes and strong interest from domestic investors throughout the year, the indices delivered stellar returns of 22% and 24% in 2021, respectively.
The broader markets, however, have outperformed the benchmarks during the year. The BSE mid-cap and small-cap indices delivered more than 38% and 62% returns in 2021, respectively. However, the markets corrected nearly 10% between October and November amid outflows from foreign investors and expensive valuations of the Indian stocks.
Vedanta, Tata Motors, Adani Enterprises and Adani Transmission surged up to 298% in 2021, data compiled by FE show, whereas, in contrast, Aurobindo Pharma, Hero MotoCorp, Yes Bank and Bandhan Bank dipped up to 37% during the same period, being the top laggards of 2021.
Dhiraj Relli, MD & CEO, HDFC Securities, said: “What a year 2021 has been. The globe recovered from the Covid pandemic but faced another round of virus spread in March. However, a resilient Nifty kept rising through the year till October and then saw some decent correction. Globally and in India the marketcap to GDP ratio touched an all-time high due to large liquidity flows, low-interest rates, the expectation of early return to normalcy and low returns from other asset classes.”
On Friday, the BSE Sensex advanced 459.50 points or 0.8% to close at 58,253.82. Similarly, the Nifty-50 ended 150.10 points or 0.8% higher at 17,354.05. Twenty-seven constituents ended higher in the 30-share BSE Sensex. Titan Company was the top Sensex gainer after rising 3.5%. UltraTech Cement, Kotak Mahindra Bank, Maruti Suzuki and SBI were other top gainers in the index. NTPC, Tech Mahindra and Powergrid Corp were among the laggards.
All sectors ended with gains in the intra-day session on Friday. The Nifty Bank, auto, metals and FMCG were the top sectoral gainers, gaining over 1% each. The overall advance/decline ratio remained majorly positive in the day’s trade. Around 2,000 stocks declined on the BSE on Friday, whereas 1,000 stocks ended in the red, data from BSE showed.
The upcoming year will be comparatively volatile than the outgoing year whereas corporate earnings and macroeconomic factors will be the key drivers during the year. However, expectations over double-digit growth in the markets remain favourable — with automobile and banking sectors in major focus among others. Says Naveen Kulkarni, chief investment officer, Axis Securities, “2022 is very likely to be another year of good double-digit returns and continued wealth creation. Autos, Banks, and Capital goods, literally the A B C of equity markets, will be the most interesting sectors for 2022.”