After a two-year liquidity-fueled bull run, the BSE Sensex confronted its second of reckoning in 2022 as Russia marched into Ukraine, the US Federal Reserve got here out all weapons blazing in its warfare in opposition to inflation, and a cataclysm engulfed international monetary markets.
The aftershocks of the COVID-19 pandemic, mixed with geopolitical upheavals, a provide shock within the vitality markets, and synchronised financial coverage tightening by central banks internationally, meant the worldwide economic system was engulfed in a continuing tangle of ‘polycrisis.’
However the unwavering religion of home traders saved Dalal Road comparatively unscathed, and the Indian benchmarks shrugged off the gloomy cues with aplomb.
After a lacklustre spell for a lot of the yr, the Sensex began choosing up momentum because the festive season approached. It closed at its all-time excessive of 63,284.19 on Dec. 1.
Nevertheless, hopes of a year-end Santa Claus rally had been dashed as spiralling COVID instances in China sparked renewed fears of a worldwide pandemic wave, sending bulls scurrying for canopy.
The Sensex is up simply 1.12% year-to-date until Dec. 25, however remains to be the world’s best-performing massive market index.
In truth, not one of the main international indices have managed to muster positive factors on this brutal yr, together with the Dow Jones, which is down 9.24% in 2022 to this point; FTSE 100 dipped 0.43%; Nikkei shed 10.47%; Cling Seng misplaced 15.82%; and the Shanghai Composite Index dropped 16.15%.
The credit score for this relative outperformance goes largely to home retail and institutional traders, who saved the religion regardless of the regular drumbeat of destructive headlines and absorbed the file selloff by overseas funds.
Examine this to the panic of the worldwide monetary disaster of 2008, when the Sensex collapsed by over 50% as overseas institutional traders pressed the exit button. FIIs have pulled out a file Rs 1.21 lakh crore from Indian equities in 2022 to this point, in lockstep with price hikes by the US Fed, which have triggered an exodus from rising markets, together with India.
In distinction, home traders displayed the sharp instincts of market veterans and ‘purchased the dip’ with a vengeance.
The share of retail traders’ shareholding in NSE-listed corporations reached an all-time excessive of seven.42%, or round Rs 19 lakh crore, as on March 31, 2022.
Mutual fund investments by means of systematic funding plans, or the SIP route, have additionally been on a rising pattern regardless of market fluctuations, touching a file excessive of Rs 13,306 crore in November in each fairness and debt segments.
This pushed the belongings underneath administration of the 43-player mutual fund business to a lifetime peak of Rs 40.49 lakh crore on the finish of November.
India’s strong fundamentals and robust company efficiency at a time when the worldwide economic system teetered getting ready to a recession had been one other tailwind for equities.
“GST assortment stood above Rs 1.4 lakh crore for the eighth consecutive month in November, whereas e-way invoice technology has remained above the 7 crore quantity since March 2022. Different financial indicators like GDP and PMI too recovered effectively post-pandemic,” stated Siddhartha Khemka, head of retail analysis at Motilal Oswal Monetary Providers.
“The driving pressure behind India’s outperformance was the robust company earnings progress of 24% CAGR over FY20-22 in addition to the pick-up in capex by the central authorities, which revived the Indian economic system from the COVID-led stoop,” he added.