Indian equities surprised on the upside to deliver positive returns in calendar year 2020 despite very high volatility due to Covid-19 pandemic, which brought the economy to a complete halt. The Indian economy witnessed its first ever quarterly contraction since the government started compiling quarterly GDP data in 1996, in the first quarter of the current financial year. However, gush of liquidity and subsequent reopening of the economy helped equity markets deliver positive returns, analysts said.
The Sensex rose 12 per cent to hit an all-time high of 46,373.34 in calendar year 2020 and Nifty advanced 11.74 per cent to an all-time high of 13,597.50. The mid- and small-cap shares outperformed their larger peers, with Nifty Midcap 100 rising 20 per cent and Nifty Smallcap 100 advancing 18 per cent.
From low levels hit in March, the Sensex and Nifty have rallied 81 per cent, while Nifty Midcap 100 index is up 92 per cent and Nifty Smallcap 100 index has surged 116 per cent.
However, the journey to record highs for the benchmarks has been a rough one. In March 2020, when the government announced a countrywide lockdown to curb the spread of coronavirus, the benchmarks fell to multi-year lows. The Sensex touched a multi-year low of 25,638 and Nifty tumbled to 7,511, its worst March since inception in 1994, data from National Stock Exchange showed. Last time, the Nifty witnessed worst March performance was in 2001, when well-known investor Ketan Parekh was arrested for fraudulently jacking up stock prices of information, communications and entertainment stocks, then famously known as ICE shares.
The foreign institutional investors (FIIs) turned net sellers, selling shares worth Rs 61,972.75 crore in March and Rs 6,883.57 crore in April, data compiled by National Securities Depository Limited (NSDL) showed.
However, the FIIs started buying Indian shares later due to gradual reopening of the economy and value buying at lower levels. So far in financial year 2020, FIIs have bought shares worth Rs 1.41 lakh crore. As per data on the website of NSDL (National Securities Depository Limited), the FII annual investment in the Indian market this year has been the highest since 2002.
Pharma, IT Sectors Best In 2020
Pharma shares gave the best returns in 2020. Investors flocked to buy shares of drug makers as the Covid-19 pandemic and resultant rise in health consciousness saw high sales of medicines. The gauge of pharma stocks on the National Stock Exchange jumped 55 per cent.
IT shares also delivered smart returns in 2020 as the work-from-home culture, born out of the need to curb spread of Covid-19, boosted the outlook for IT companies. The index climbed 46 per cent during the year.
On the flip side, realty and banking services companies gave negative return on an annual basis.
Top Nifty gainers in 2020
- Divi’s Labs up 96%
- Dr Reddy’s Labs up 75%
- Cipla up 65%
- Infosys up 57%
- HCL Technologies up 52%
Top Nifty losers in 2020
- Eicher Motors down 89%
- Indusind Bank down 39%
- Coal India down 33%
- UPL down 24%
- Indian Oil down 24%
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