MARKET WRAP FY18: Sensex gains 12%; PSU banks biggest losers

Markets started losing momentum soon after Budget 2018-19 on selling by foreign institutional investors; domestic investors also weighed on Indian markets

The year 2017-18 saw the bulls losing their steam, with the S&P BSE Sensex rising 12 per cent, compared with a 16 per cent rally in FY17. On the other hand, the Nifty50 index gained 11% in FY18, as against 18% in the previous corresponding period.
 
Mid-and small-caps, however, outperformed their larger peers as money – both local and foreign – poured in. While the BSE Mid-cap index gained 14%, the Small-cap index rallied 20% during FY18.
 
Markets started losing momentum soon after the Budget on selling by FIIs as well as domestic investors weighed on Indian markets. The surprise announcement of Long Term Capital Gains (LTCG) tax caught both domestic as well as foreign investors by surprise. Rising inflation, muted macro data, dull corporate earnings and also detection of frauds in public sector banks dampened sentiment.

 

At the global level, faster tightening by US Federal Reserve, eruption of a trade war between the US and China and rising crude oil prices added to the woes, which analysts feel will still remain key monitorables in the next financial year.
 
Going ahead, analysts expect similar returns from equity markets during the next fiscal, but with increased volatility. Upcoming state elections, corporate results, oil prices, Reserve Bank of India's stance on interest rates amid rising inflation and monsoon are some of the key domestic factors that the markets will keep a tab on.
 
According to Rakesh Tarway, research head at Reliance Securities, “While the risk of higher yield may continue to persist in year ahead, we believe a healthy double digit growth in corporate earnings will aid markets to sustain high valuations.”

 
“A rise in Brent price beyond $70 may negatively hamper both our fiscal and current deficit. In addition, we believe recent increase in trade protectionism measures by USA is likely to be a risk for global equities especially if it is followed by European Unions and other nations,” Tarway adds.
 
SECTOR WATCH
 
Among sectors, consumer durable and realty indices outperformed by rising 51% and 40%, respectively, for FY18 while pharma and PSU banks remained the biggest sectoral losers. Maruti Suzuki, Bajaj Finance, HUL, Reliance Industries and Tech Mahindra were the top gainers in the Nifty50, gaining between 38-51%. Lupin, Tata Motors, Sun Pharma and Bosch were the biggest losers, down between 22% - 48%, AceEquity data show.

SECTOR WATCH
Indices	Latest Value	YoY Change (%)
Sensex	32968.68	12.10%
BSE Cons Durbl	22261.9	51.41%
BSE Realty	2229.92	40.83%
BSE CD & Serv	4095.68	21.80%
BSE Energy	3940.25	18.78%
BSE Basic Metal	3142.4	16.49%
BSE IT	12100.55	16.33%
BSE Finance	5570.09	15.10%
BSE Cap Goods	18476.73	14.95%
BSE Metal	13322.03	14.64%
BSE Teck	6513.28	12.87%
BSE Bankex	27197.88	12.33%
BSE FMCG	10290.14	11.63%
BSE Industrials	3550.83	10.43%
BSE Oil & Gas	14614.42	9.95%
BSE Auto	24057.25	9.20%
BSE Telecom	1321.9	8.10%
BSE Utilities	2023.78	3.28%
BSE Power	2125.83	-5.60%
BSE PSU	7861.11	-7.28%
BSE Healthcare	13157.62	-14.18%
Source: AceEquity