The benchmark Sensex which ended the last trading day of the year with a moderate gain of 27.67 points at 21,170.68 in a listless session, clocked its second annual increase of 8.97 per cent in a row. However, this pales in comparison to about 29 per cent gain for the Wall Street, 56 per cent for Japan and 16 per cent for Europe. Developing markets generally under-performed the developed markets by a wide margin.
Despite several hiccups like US Federal Reserve tapering its bond buying programme, capital outflows from debt market, the rupee depreciation and the fall in GDP growth, the Sensex garnered 1,743.97 points or 8.97 per cent in calendar 2013. From a 52-week low of 17,448.71 on August 28, 2013, the Sensex has risen 3,721.97 points or 21.33 per cent.
Dipen Shah, head, Private Client Group Research, Kotak Securities, said, “Calendar 2013 yielded marginal gains for the benchmark indices though there was significant volatility during the period. The major factors which influenced markets were the Fed taper concerns, rupee weakness (it has recovered from the lows, though) inflation and growth concerns and finally, expectations on the political front.”
There was a net foreign institutional investor inflow of Rs 1,13,136 crore ($20.10 billion) into stock market. This was the second consecutive yearly inflows by foreign investors after pulling out a net amount of Rs 2,714 crore ($358 million) from the share market in 2011.
In 2012, FIIs made a net infusion of Rs 1.3 lakh crore ($24 billion) in equities.
However, overseas investors pulled out Rs 50,847 crore ($8 billion) from the bond market in 2013. This takes the overall investment by FIIs into the debt and equity market together to Rs 62,288 crore ($10.2 billion).
On the other hand, world stocks were close to six-year peaks in 2013 as investors celebrated a pick-up in global growth with expectations of more to come. Thanks to ultra-easy monetary policies and an improving economic outlook, equities have enjoyed a vintage year in 2013.
Wall Street saw its best year since 1997 with a 29 per cent gain, while Japan’s Nikkei ended up 56.7 per cent and European shares gained 16 per cent. European shares also saw its best year since 2009.
Going ahead, there is some data about the initial phase of the Fed tapering. However, India has built a war chest of about $35 billion recently, which has reduced rupee’s vulnerability to a great extent. Current