The calendar year 2019 was full of action for the Indian market – from perplexing volatility to astonishing intraday gains – market gurus found it tough to predict the course of the market.
The benchmark indices traded higher as the government swung into action to support the economy and the hopes, that more measures like corporate tax cuts will come through, grew stronger. Many even expect refreshing changes in personal income tax slabs in the upcoming Budget.
However, market participants point out the fact that the rally in the market was confined to select stocks and the secondary indices did not witness the same optimism. Midcaps and smallcaps slipped in the red hit by the gloomy macroeconomic environment.
Moreover, this year’s rally has been driven by FPIs and is restricted to mainly largecaps. The gains in the market came after the government jumped in to revive the confidence of the investors.
The Indian market is still under performing major global peers as the worries of a slowdown in the domestic economy loom large.
“The entire Nifty50 returns in this calendar year have come after the corporate tax cut announcement in September 2019. In the global context, the Indian market has grossly under performed the developed markets and even some of the emerging markets. Portfolios of most funds, PMSes and individuals have under performed the Nifty50,” said Rusmik Oza, Senior VP & Head of Fundamental Research at Kotak Securities.
The leaders and laggards of Sensex
As of December 23 close, with a 15 percent rise, the BSE Sensex outperformed its major counterparts. In the 30-share pack, 19 stocks have logged gains in this calendar year.
Bharti Airtel (up 58.28 percent) led the pack of gainers, followed by Bajaj Finance (up 57.47 percent), ICICI Bank (up 50.40 percent), Reliance Industries (up 40.14 percent) and Kotak Mahindra Bank (up 35.88 percent), showed data from AceEquity.
On the flip side, Mahindra & Mahindra emerged as the top loser during the same period, with a loss of 34.57 percent. It was followed by Hero MotoCorp (down 22.09 percent), ONGC (down 17.01 percent), ITC (down 15.16 percent) and Tata Steel (down 11.46 percent).
The leaders and laggards of Nifty
Nifty gained nearly 13 percent in the calendar year 2019 till December 23 close, with Bharti Airtel (up 58.50 percent) as the lead gainer. It was followed by, Bajaj Finance (up 57.27 percent), ICICI Bank (up 50.29 percent), Bajaj Finserv (up 43.65 percent) and Reliance Industries (up 40.15 percent).
Among the losers, Yes Bank (down 72.69 percent) was the highest loser till December 23. Followed by Zee Entertainment (down 38.13 percent), Mahindra & Mahindra (down 34.58 percent), GAIL (India) (down 33.1 percent) and Vedanta (down 26.93 percent) appear next among the losers among the Nifty stocks.
Outlook for 2020
Experts mostly have a positive view on the market as they expect the domestic economy to gain strength in the coming quarters and global factors, such as the US-China trade war, to ease further. The government is also expected to announce steps in Budget 2020 which will help the economy and bring cheer to the market.
However, there is a little chance that the Indian market will witness a steep rise in the coming year. On the contrary, the risk of sudden deep correction will keep looming.
“In the present context, our Nifty target for the year 2020 is 12,900, but with the rising risk of a sudden deep correction,” said Amar Ambani, Senior President and Research Head – Institutional Equities at Yes Securities.
“Having said that, 2020 will be a year to firm up positions in equities, as we believe that 2021 will bring a start of a secular rally. I would, therefore, advocate at least a 65 percent asset allocation to equities if you have a 3-4 year time horizon,” Ambani added.
As per the brokerage firm Sharekhan by BNP Paribas, the equity market seems to be factoring in an improvement in macroeconomic conditions domestically. They are not assuming a big-bang recovery, but hoping the ‘worst is over’. In addition to accommodative monetary policy, the government is taking policy measures to address the issue, though the fiscal space to do so is getting quite limited.
The global scenario also seems favourable for equities, given the interest rate cuts in the US and the resumption of quantitative easing in Europe. Finally, the US and China seem to be moving towards some kind of understanding on trade tariff-related issues.
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