Indices post best gains of the decade in FY21

Small- and mid-cap indices scored the biggest gains, surging 114.90% and 90.93%, respectively, during the year.

India’s benchmark indices surged more than 68% in the financial year ended 31 March, their best gains in a decade, as robust foreign liquidity inflows outweighed widespread uncertainties caused by the pandemic.

The BSE’s 30-stock benchmark Sensex gained 20,040.66 points, or 68.01%, to settle at 49,509.15 points, from 29,468.49 points as of end-March 2020. The Sensex hit an all-time high level of 52,516.76 points on 16 March.

Similarly, the National Stock Exchange’s 50-stock NSE Nifty climbed 6,092.95 points, or 70.87%, to close FY21 at 14,690.70 after scaling a lifetime high of 15,431.75 on 16 February.

The market surge boosted investor wealth by 90.8 trillion in FY21, the most in a financial year. Market capitalization of all listed stocks on the BSE grew to 204 trillion from 113 trillion in April last year, stock exchange data showed.

“The markets have rallied by close to 80%, both Nifty and Sensex, in FY21, the best financial performance in a decade. The key thing to note is the sharp drawdown witnessed towards the close of the preceding financial year,” said Joseph Thomas, head of research at Emkay Wealth Management.

“As we enter the new financial year, there is a ray of hope that the economic performance will continue with support from fiscal and monetary policies, and the second wave of the pandemic may be well under control as the vaccine roll-out is under way across the globe,” Thomas said.

Foreign portfolio investors (FPIs) purchased a record $37.09 billion in equities in FY21, while selling $6.71 billion in debt. Domestic institutional investors (DIIs) meanwhile, sold shares worth 1.34 trillion during the year, according to exchange data.

Small- and mid-cap indices scored the biggest gains, surging 114.90% and 90.93%, respectively, during the year.

Investors and traders also showed a growing penchant for stock market investing during the year, as seen from a 26% jump in openings of new demat accounts.

“Market had a jolt, in the quarter of January-March 2020, due to once-in-an-era of pandemic bringing uncertainty and standstill in the economy. If we adjust that, the return will not be so dramatic,” said Vinod Nair, head of research at Geojit Financial Services. The one-time effect of a recovering economy, aided by the “best-ever fiscal and monetary stimulus” is bound to stay with us for some more time, Nair added.

Among sectoral indices, the BSE-Metal index topped the gainers’ list by posting 151.18% jump during the year, followed by BSE-Basic Materials index which surged 133.51%.

The BSE-Industrials index (123.54%), BSE-Auto (107.07%) and BSE-IT (106.68%) were the other top gainers. Three indices gained more than 80%—BSE Realty with 97.27%, BSE Capital Goods with 92.14% and BSE Teck 86.15% during FY21.

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