NEWS

Sensex gains over 10,500 points in 2021, rises for 6th year in a row

Dec 31, 2021

Overall, markets kept a close eye on the pace of vaccination as well as high-frequency indicators in 2021. The second half of the year saw a breakneck amount of fundraising for initial public offerings (IPO), supply chain disruptions and an emerging new Covid variant to round up the year. One thing which remained consistent was volatility and uncertainty.

With a rally of 162.61 per cent, Tata Steel emerged as the top gainer in the Nifty 50 index. It was followed by Hindalco Industries (up 97.36 per cent), Wipro (up 85.19 per cent), Bajaj Finserv (up 84.72 per cent) and Tech Mahindra (84.13 per cent). Grasim, Tata Steel, JSW Steel, State Bank of India, Titan Company and UPL also advanced over 60 per cent in 2021.

Going ahead, Kranthi Bathini, equity strategist, WealthMills Securities believes that players like Reliance Industries (RIL), Larsen Toubro, Macrotech Developers, ICICI Prudential Life and ICICI Bank may outperform in 2022.

“Investors may also consider buying Piramal Enterprises on dips,” he said, adding Sensex will be in the range of 65,000-70,000 by the end of December 2022.

On the other hand, Hero MotoCorp (down 20.74 per cent), Kotak Mahindra Bank (down 9.91 per cent), Dr Reddy’s Labs (down 5.75 per cent), Bajaj Auto (down 5.61 per cent), HDFC Life (down 3.71 per cent), Maruti Suzuki (down 3 per cent), Hindustan Unilever (down 1.44 per cent) and IndusInd Bank (down 0.79 per cent) ended the year in the red.

Among the sectoral indices on the BSE, the Power index gained the most 68.84 per cent. The BSE Metal, IT, Realty and Capital Goods also advanced over 50 per cent during the past 12 months. Other sectoral indices also ended the year in the green.

Commenting on various sectors, Joseph Thomas, head of research, Emkay Wealth Management said, “Technology, pharmaceuticals and healthcare sectors have been in the limelight for almost two years. These sectors will continue to be relevant to the economy for many reasons, the more prominent being the enhanced dependence on digitisation against the background of restricted mobility, the need to transact online, and the reliance on pro-active and preventive healthcare all borne out of the peculiar circumstances which prevailed recently.”

“The economic revival in the US and Europe has also contributed to the prospects of traditional product and services tech companies. Realty and all the related sub-sectors or ancillaries are seeing revival at this juncture, and it may continue to rise with the revival in economic activity. The actual numbers from this space indicate a revival after a prolonged period of stagnation in prices. With enhanced digitisation, renewed thrust on retail business, and with not so problematic NPA profile, the financial sector may see a major surge in growth,” Thomas said.

Broader indices the BSE Midcap and Smallcap gained 39.18 per cent and 62.77 per cent, respectively.

Thomas added that midcaps and smallcaps do provide from time to time returns much higher than what the large caps offer. But, at least in the case of small caps, it is true that these extraordinary returns may be limited to specific periods and for select scrips. In contrast, large caps provide more stable returns due to more consistent expansion in market capitalisation.

“The secret of success here is to invest into funds which have a good track record of running profitable portfolios. This is more relevant in the case of small caps and to a certain extent in the case of midcaps. The stock selection or the stocks which are in the portfolio would ultimately make the difference in terms of the realised returns. Therefore, it becomes all the more important that one invests into portfolios designed with a futuristic perspective,” he added.

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