MUMBAI: On Tuesday, as the Samvat year 2074 ended with a 41-point sensex gain, it brought to an end one of the most volatile years in the last decade: The index rallied from a little over 32k to an all-time high of almost 39k, only to fall sharply to about 33k before finally settling at nearly 35k.
The Samvat, a traditional Hindu calendar year, will be remembered for the sensex outperforming most of the other broader indices as large-cap stocks rallied, while some of the small- and mid-cap stocks were hammered ruthlessly on Dalal Street.
As a result, despite the 8.3% rise in the sensex, the BSE’s mid-cap index lost 8%, while the small-cap index lost over 15% during the year. The sharper losses in mid- and small-cap stocks also led to a dip in investors’ wealth by Rs 3.9 lakh crore with the BSE’s market capitalisation now at Rs 140.4 lakh crore.
The year also recorded one of the sharpest outflows by foreign funds, mainly because of rising crude oil prices, that led to some sharp weakness in the rupee, which nearly touched 75 to a dollar in mid-October before ending the Samvat at 73 — a depreciation of over 12% during the year. Official data shows that FPIs have started taking money out of India at an increasing rate in the last few months with a nearly Rs 40,000-crore net outflow from stocks since September itself. However, the net inflow figures of the initial months have given the data some respectability with the net outflow at Rs 21,343 crore.
Foreign funds also sold in the debt segment with the net outflow figure at almost Rs 47,000 crore. This huge selling also had an impact on the yields in the bond market with the 10-year benchmark yield hardening by more than one percentage point to over 8.2% in early October, but ended the year at 7.8% on the back of a liquidity infusion by the RBI.
The year also witnessed emergence of domestic mutual funds as the counter-balance to foreign funds, with systematic investment plans (SIPs) rising to become a game changer in the stock market. With inflows of about Rs 7,500 crore (that’s around $1 billion) each month flowing into mutual funds and not much option to buy stocks outside India, domestic money managers cushioned sharp selling by foreign funds, industry players said.