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Equity investors on Dalal Street received a healthy return in FY21 despite Covid-led disruptions and concerns over its impact on the economy. The BSE Sensex, Midcap and Smallcap climbed 70%, 91% and 114%, respectively, during the year. As a result, the market capitalisation of BSE-listed firms also surged 80% to nearly Rs 205 lakh crore.

With a rally of 1,639%, cloud communication technology firm Tanla Platforms emerged as the top gainer. Shares of the company have advanced to Rs 803.45 on March 30, 2021 from Rs 46.20 on March 30, 2020. The rise in share price indicates that an investment of Rs 10,000 in Tanla at the end of last year would have now become over Rs 1.70 lakh.

Intellect Design Arena (up 1,234%), Subex (up 1,086%), Adani Total Gas (up 999%), Saregama India (up 748%), Neuland Laboratories (up 724%), Ramco Systems (up 661%), Godavari Power (up 635%) and Balaji Amines (up 613%) and Mastek (up 562%) emerged as top gainers in the BSE Smallcap index.

Earlier, the domestic equity market had gone into a tailspin in March 2020, with the Sensex sinking more than 8,800 points that month as concerns over the pandemic impact on the economy affected investor sentiments. Market analysts believe that the major factor which assured that the market recovery sustains was the reopening of the economy, which led to the kick-start of businesses. Measures were taken by the RBI and the government also put the macros back on track.

In the midcap space, billionaire Gautam Adani-led Adani Green Energy soared 652% during the financial year ending March 31. Adani Enterprises (up 650%), Adani Transmission (up 364%), Jindal Steel and Power (up 309%), Cholamandalam Investment (up 263%), Steel Authority of India (up 243%) and Adani Power (up 222%) were among the other major gainers in the BSE Midcap index. Tata Power, Vodafone Idea and L&T Infotech also gained 215%, 196% and 191%, respectively.

Commenting on the domestic equity market, AK Prabhakar, Head of Research, IDBI Capital Markets said, “From a next 2 years horizon, I am positive on equities as I believe that the earnings growth improvement will play out. There would be volatility in the near-term because of changes in fund flows, but eventually, earnings growth will be the key. FY22 will see stock-specific ideas outperforming broader markets in a meaningful manner.”

Prabhakar is positive on Alembic Pharma, Bayer Corp, Jonhson Control Hitachi, Nestle and HDFC Life Insurance for the next 1 year.

Coming to large cap space, as many as 15 stocks rallied over 100% in FY21. Auto major Tata Motors jumped 318% to Rs 297. Hindalco Industries, JSW Steel, Grasim Industries, Tata Steel, Adani Ports, Mahindra & Mahindra, IndusInd Bank, Bajaj Finance and HCL Technologies have gained between 125%-241% since March 31 last year.

While advising investors Prabhakar said that investors should focus on market leaders in sectors that have seen over 70% normalisation to pre-covid levels. “Focus should also be on top-class management, good return ratios and appropriate debt levels,” he added.