Investor wealth soared 27 per cent to around Rs 67.7 lakh crore in 2012, with the stock indices gaining around 25 per cent on hefty capital inflows and a slew of reform measures by the government, even as concerns remain over economic growth and rising fiscal deficit.
Indian bourses made a dramatic turnaround after a meltdown in 2011, leaving in its wake strong optimism for a bullish 2013. Markets rose on hopes of the Reserve Bank of India (RBI) cutting rates, hefty capital inflows, a recovery in the global economy and excellent earnings growth in the third quarter of 2012-13.
The smart recovery helped investor wealth soar by about Rs 14.5 lakh crore to Rs 67,78,609 crore as on December 21, against Rs 53,12,875 crore at the end of last year.
The Q3 earnings, which would most likely beat estimates by market pundits, points towards more reforms by the United Progressive Alliance government and increased retail participation in quality share offerings — IPOs/FPOs/OFS — in the near future. This is expected to augment the bullish fervor in 2013, an analyst said.
The Bombay Stock Exchange sensitive index Sensex posted impressive gains of 3,787 points, or 24.5 per cent, at 19,242 on December 21, 2012, against the preceding year-end’s close of 15,454.92 points.
The Sensex had lost 5,054 points, or over 24 per cent, during 2011. The National Stock Exchange’s Nifty also spurted by 1,223 points or 26.5 per cent to 5,847.70 on December 21, 2012, from the previous yearend’s close of 4,624.30.
Investors ignored dwindling industrial output, declining exports, ballooning fiscal deficit and overall gloomy economic atmosphere in domestic and international markets amid fears of the European debt crisis spreading worldwide. Foreign institutional investors (FIIs) made the second largest investment in the Indian capital market in a year during 2012.
According to Securities and Exchange Board of India (Sebi) data, FIIs pumped in Rs 1,21,652 crore or $23.15 billion this year till December 21. Earlier, they had made the biggest investment of Rs 1,33,266 crore or $29.36 billion in equities during 2010.
Kishor P Ostwal, chairman and managing director of CNI Research, said a few big investors made large profits in the market as select stocks scaled new highs in view of paucity of floating stocks.
However, retail investors were not benefitted either in the secondary market or in the IPO market and were seen selling their holdings. As a result, public ownership in India Inc came down to six-seven per cent, against a high of 15 per cent in 2007, he said.
Though the Sensex could not surpass its all-time peak registered in 2008, the sectoral indices like BSE-FMCG, BSE-HC, BSE-CD and BSE-Auto logged their historic highs during the year on hectic buying by foreign funds.
Analysts said at the beginning of 2012 investors feared a further slide in view of corruption scams.
However, the market surprised everyone by rising almost 1,739 points or 11.25 per cent, the largest monthly rise in absolute terms in the month of January in any calender year, following hectic buying by foreign funds. It was also the biggest monthly performance since September 2010 when it had gained 2,098 points or 11.67 per cent.
The rally in the month was driven by strong global cues on hopes of some stabilibation in the Europe and gradual improvement in the US economic data.
