 "Deutsche Bank cuts Sensex target to 28,000")
Indian equities ended the year in negative territory for the first time in four years.
Sustained selling by foreign investors, particularly in the second half, slowing growth in China and lacklustre corporate earnings dragged down the benchmark indices.
The 30-share BSE Sensex ended the year with a loss of five per cent. The 50-share Nifty on the National Stock Exchange slid four per cent. Both benchmark indices ended the year above the psychological 26,000 and 7,900 levels, respectively, but significantly lower than the record intra-day highs of 30,000 and 9,000 they had touched in March.
After four months of sustained purchase, global risk-off sentiment spurred foreign investors to pull out money from here. Foreign portfolio investors (FPIs) turned net sellers in May and June. In August, they pulled out a record Rs 17,200 crore, followed by net sales in the next three months. In the year, foreign institutional investors (FIIs) net-bought equities worth Rs 17,251 crore.
FPI sales were largely to do with the risk-off trade against emerging markets, including India, due to worry on the effect of the US central bank, the Federal reserve, raising rates for the first time since 2008. However, domestic institutional investors, led by mutual funds, were much more bullish on the Indian market. MFs alone bought shares worth nearly Rs 72,000 crore in the year.
According to a recent Morgan Stanley report, bank fixed deposits emerged the best performing asset class in India, for only the third time in 15 years, outperforming equities, gold and property.
The report further noted that of the three calendar years with negative equity return in the past decade, 2015 is the only one where mid-caps had outperformed large-caps in a falling market. \"Conventional wisdom suggests that in years of negative return, mid-caps underperform large-cap stocks, owing to higher pressure on earnings and lower liquidity in the markets,\" said the note.
Till Wednesday, large-caps as measured by the Nifty-50 had lost 4.7 per cent; the Nifty Mid-Cap 100 was up 6.2 per cent. “The silver lining for 2015, however, was the continued flows received by domestic institutions, particularly mutual funds, from retail (small) participants who saw great opportunity in exploiting the valuation arbitrage created from the earlier run-up in the benchmark indices and large-cap stocks. Hence, mid-cap and small-cap funds (and also stocks) saw phenomenal participation from retail investors, which has continued through 2015,” said Krishna Kumar Karwa, managing director, Emkay Global Financial Services.
Defensive sectors such as consumer durables, health care and fast moving consumer goods were among the top sectoral indices. Metals and basic materials were among the top losers. So were the realty and bankex indices, despite the Reserve Bank reducing its key policy rate by 125 basis points during the year.
However, on Thursday, the final day of 2015, the market logged modest gains, amid strong buying from foreign investors and volatile trade, due to unwinding and rollover of derivative positions. The BSE Sensex rose 157.51 points or 0.6 per cent to 26117.54 and the NSE Nifty advanced 50.1 points, also 0.6 per cent, to 7,946.35.
FIIs bought shares worth Rs 1,123 crore, while domestic institutional investors sold shares worth Rs 257 crore, provisional data showed.
Sustained selling by foreign investors, particularly in the second half, slowing growth in China and lacklustre corporate earnings dragged down the benchmark indices.
The 30-share BSE Sensex ended the year with a loss of five per cent. The 50-share Nifty on the National Stock Exchange slid four per cent. Both benchmark indices ended the year above the psychological 26,000 and 7,900 levels, respectively, but significantly lower than the record intra-day highs of 30,000 and 9,000 they had touched in March.
After four months of sustained purchase, global risk-off sentiment spurred foreign investors to pull out money from here. Foreign portfolio investors (FPIs) turned net sellers in May and June. In August, they pulled out a record Rs 17,200 crore, followed by net sales in the next three months. In the year, foreign institutional investors (FIIs) net-bought equities worth Rs 17,251 crore.
FPI sales were largely to do with the risk-off trade against emerging markets, including India, due to worry on the effect of the US central bank, the Federal reserve, raising rates for the first time since 2008. However, domestic institutional investors, led by mutual funds, were much more bullish on the Indian market. MFs alone bought shares worth nearly Rs 72,000 crore in the year.
According to a recent Morgan Stanley report, bank fixed deposits emerged the best performing asset class in India, for only the third time in 15 years, outperforming equities, gold and property.
The report further noted that of the three calendar years with negative equity return in the past decade, 2015 is the only one where mid-caps had outperformed large-caps in a falling market. \"Conventional wisdom suggests that in years of negative return, mid-caps underperform large-cap stocks, owing to higher pressure on earnings and lower liquidity in the markets,\" said the note.
Till Wednesday, large-caps as measured by the Nifty-50 had lost 4.7 per cent; the Nifty Mid-Cap 100 was up 6.2 per cent. “The silver lining for 2015, however, was the continued flows received by domestic institutions, particularly mutual funds, from retail (small) participants who saw great opportunity in exploiting the valuation arbitrage created from the earlier run-up in the benchmark indices and large-cap stocks. Hence, mid-cap and small-cap funds (and also stocks) saw phenomenal participation from retail investors, which has continued through 2015,” said Krishna Kumar Karwa, managing director, Emkay Global Financial Services.
Defensive sectors such as consumer durables, health care and fast moving consumer goods were among the top sectoral indices. Metals and basic materials were among the top losers. So were the realty and bankex indices, despite the Reserve Bank reducing its key policy rate by 125 basis points during the year.
However, on Thursday, the final day of 2015, the market logged modest gains, amid strong buying from foreign investors and volatile trade, due to unwinding and rollover of derivative positions. The BSE Sensex rose 157.51 points or 0.6 per cent to 26117.54 and the NSE Nifty advanced 50.1 points, also 0.6 per cent, to 7,946.35.
FIIs bought shares worth Rs 1,123 crore, while domestic institutional investors sold shares worth Rs 257 crore, provisional data showed.
