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Indian equity benchmarks opened higher on Tuesday

Indian stock markets have overcome all odds and posted their best performance in a decade in FY21. Benchmark index Sensex has surged about 70% despite Covid-led disruptions and concerns over its impact on the economy. Before this, in the financial year 2009-10, the Sensex had risen nearly 81%.

The top gainer in the Nifty50 for FY21 was Tata Motors, up almost 350% followed by Hindalco, JSW Steel, Tata Steel, and Grasim, which were up over 200% each. Other stocks including M&M, IndusInd Bank, HCL Tech, Bajaj Finance, Infosys, Wipro, UPL among others rallied over 100% each in this period.

The rally in FY21 has been broad-based and not just restricted to large caps as we’ve seen the broader markets not only participated in the rally but even outperformed the benchmarks in FY21.

The BSE Midcap and BSE Smallcap surged by over 90% and 110%, respectively, during the course of the financial year.

Reported data from Prime Database in news reports have suggested that despite the pandemic, fund mobilisation via the primary market route also was the highest ever in FY21 with India Inc raising Rs 1,88,900 crore (Rs 1.88 trillion) as compared to Rs 91,670 crore raised in FY20.

In fact, 30 main-board IPOs which have hit the Street have collectively raised Rs 31,268 crore and this was an increase of 54% from the Rs 20,350 crore raised through 13 IPOs in 2019-20.

Going ahead, analysts expect the market rally to continue in the next fiscal year as well.

Rajesh Agarwal, Head Of Research, AUM Capital said, “With the acceleration of the vaccination drive, rebound in economic indicators and corporate production to pre-covid levels, massive liquidity infusion across the globe and government focus on reviving the economy markets are likely to perform in the longer term. The services sector, especially activities in aviation, entertainment, hospitality, etc. continue to be relatively more impacted as compared to manufacturing sector as these are more contact intensive. However, we remain positive on future prospects and expect sequential improvement to continue.”

He also believes that the markets hold promise over the long term. The strong sequential improvement in economic activity, favorable external scenario, monetary and fiscal measures undertaken along with relatively better placed rural economy also supports this optimism.

“In the short to medium term, though there are various concerns such as 2nd Covid wave, rising yields, ascending retail inflation and high crude prices. While near term volatility may be high, markets may consolidate before taking further direction based on economic recovery indicators”, he added.