The Sensex and Nifty may have gained over 10 per cent in fiscal 2012-13, but the sharp decline in select mid- and small-cap stocks hogged the limelight. While the BSE mid-cap index lost 0.8 per cent, the small-cap index slipped 10 per cent this fiscal.
However, foreign institutional investors continued to repose faith in Indian equities. During the fiscal, their net purchases in the secondary market alone touched Rs 3.5-lakh crore. If net purchases in the primary market are also taken in to account, their investment rises to Rs 3.85-lakh crore.
Foreign investors were enthused by the slew of policy reforms unleashed by the Government in the later part of 2012. Again, some of the funds pumped into the US and European economies by their central banks also found their way into other emerging markets, including India.
While the European Central Bank launched a bond buying plan to lower borrowing costs, the US Federal Reserve announced $40-billion bond buying programme every month.
Among the sectoral indices, FMCG and healthcare were the star performers while metal and power were the worst. A weak rupee coupled with improvement in the US economy boosted information technology stocks.
With slowing economic growth and industrial production coupled with high policy rates taking their toll on corporate performance, stock prices have been unable to sustain their upward move since the beginning of this calendar.
According to Jagannatham Thunuguntla of SMC Global, it is quite understandable that the market is putting faith only on defensive stocks while staying away from high-beta counters. “The market will continue to move in a range and will take clear direction only after the general election,” he added.