MUMBAI, Dec 31: The equity market zoomed up by 6,225.05 points during the year,the best gain in last five years.
Also for the first time in history, investors wealth has increased to Rs 100 lakh crore owing to stability in the government at the Centre and awaiting economic reforms. While one trading day is still to go, the Sensex ended at 27,395.73 points as compared to the last year close at 21,170.68 points.
At a glance during the year, BSE Sensex registered the lowest figure at 19,963 on February 4 and the highest figure at 28,822 on November 28.
Even, the Nifty of National Stock Exchange (NSE) posted the lowest figure at 5,933 in February and on peak to cross 8000 mark level at 8,617 points, first time in history. The BSE Sensex posted a rally of 29 per cent during the year.
Exactly five years back, the BSE Sensex had spurted by 7,817 points.
Similarly, Nifty of National Stock Exchange (NSE) too advanced by 30 per cent this year, the credit goes to political stability. However, this upward trend will be depend on speed of economic reform that take place in next five years.
With a record-breaking rallies for most part of the year, the stock markets have outshined the gold and silver, for the third year in a row with much better returns for the investors in 2014.
Riding high on robust investor sentiments, impressive foreign fund inflow and formation of a new majority government at the Centre, the stock market benchmark Sensex garnered a positive return of about 30 per cent for investors in 2014.
The BJP-led NDA government which won elections with a solid margin over UPA has showcased a mandate, which is that of development and market expected that now decisions and actions would be taken to spur economic growth of India, market expert said.
Though, the equity market kept its supremacy throughout the year, the journey of Indian Currency remained tough, as it was at 63.67 a 13-month-low on December 29 against the greenback, following sustained dollar demand from importers. This was the weakest close since 63.71 on November 12, 2013. The Rupee plunged in the last week of the year due to dollar demand from oil companies which dented the Rupee movement.
Stable government at Centre, US economy, world economy coming out of recession and easing tensions in Iraq and Syria led investors to park their money in stocks rather than safe heavens like gold, it added. Excellent performance in domestic equities, prompting investors to move away from safe havens and into riskier assets. Besides strong equity performance, gold has been affected by the government’s decision to scrap the 80-20 gold-import norm, the market sources said. The precious metal, Gold has been on back foot for three consecutive years now vis-a-vis equities after outperforming stock market for more than a decade. Gold was at Rs 26,400 per ten gm in December. A year back it was Rs 30,000 per ten gm.
Last but not the least, developments in international markets have weighed on local gold and silver prices. Expectations that the Federal Reserve, the US central bank, would start normalising its policy in 2015 have triggered a massive rally in dollar. This has dimmed the appetite for gold.
Foreign fund flows which have a major impact on equity market trends continued to be strong possibly in anticipation of major reforms that could take place under the new government, it added.
Seeing the performance of sectoral indices, Bankex, Consumer Durable, Health Care and Auto were the star performer of the year, while in scrips, Maruti Suzuki, Axis Bank, State Bank of India, ICICI Bank, Cipla, BHEL, HDFC Bank, L & T, Bajaj Auto, Coal India, Tata Motors and Mahindra and Mahindra shone.
Small and Medium Cap got good returns. Also with the US economy showing signs of recovery leading to dollar strengthening against most of its counterparts, likelihood of US interest rates higher in 2015, inflationary pressures remaining subdued in most countries and crude oil prices slumping made gold unattractive and impacted the need to hold the yellow metal, they said.
The coming year is all likely to be good for equity market, factors like deflation which is a worry globally is actually a requirement for India.
As India is a major consumer of crude, falling crude and commodity prices is actually favorable for India. There is a high probability of a start of rate cut cycle by RBI in the 1st quarter of 2015 which would boost a number of sectors and improve corporate earnings from a medium to long term perspective.
Gold prices have also come down to Rs 27,000 per 10 grams from Rs 29,800 per ten grams, while silver fell from Rs 43,755 per kg to Rs 37,000 per kg.
The fall in prices of gold and silver came amid import curbs on gold for a significant part of the year, even as RBI has now eased some of these curbs. Among the Sensex stocks, Axis Bank topped the charts this year, racing up 90 per cent.
At the bottom of the chart was Tata Power which lost 11 per cent in a year when the market was on a roll. The villain of the piece was the uncertainty over higher tariffs for the company’s loss-making Mundra power plant. The Mundra plant (half of Tata Power’s capacity), fully operational since March 2013, has been the single biggest drag on the company’s consolidated numbers.
Kamlesh Rao, CEO, Kotak Securities, felt that the outlook for 2015 was very optimistic.
Markets have witnessed a buoyant trend that indicates better profit prospects for 2015. This seems to be the start of a golden era for the markets and economy, he said. (AGENCIES)
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