Samvat 2078: Sensex, Nifty better than global peers, down around 6-7% - know what factors dragged Indian markets – DETAILS!

Samvat 2078 has been a year of peaks and troughs with a roller-coaster ride in the equity market across the world. The Indian benchmark indices – Sensex and Nifty50 – have declined between 6-7 per cent witnessing significant volatility on the back of multiple headwinds in the domestic market.

Following the benchmarks suite, the broader markets such as BSE Mid and Small-cap tumbled between 5 and 8 per cent, respectively, while the Nifty Bank index corrected by around 1 per cent in the last one year.

According to Axis Securities, liquidity reversal and policy tightening, the Russia-Ukraine geopolitical crisis, and rising inflation were among the top negative factors that kept the overall market including the Indian Indices in the red during Samvat 2078.

“These developments inflicted notable changes in the market regimes, especially with higher commodity prices of base metals and crude oil over the first half of the Samvat,” brokerage said.

However, a trend reversal was seen in the second half of the Samvat with most commodity prices cooling off primarily due to the policy tightening and the expectation of a slowdown in global growth, the domestic brokerage said in its Samvat 2078 review.

Amid all this negativity, India has relatively outperformed global peers in terms of all economic parameters such as capex spend, discretionary consumption, and robust pick-up in banking activity, among others, and the same is reflected across Indian markets, ICICI Securities said in its comment.

The S&P500 and the emerging market indices were down by a whopping 22 and 29 per cent respectively over one last year period.

The brokerage added that sticky global inflation will keep central banks hawkish, and India will be no exception, similarly, implications for global liquidity flows may create medium term volatility in Indian markets.

The market in the last one-year experienced quicker rotation in investment style and sector preference and the value theme dominated the first half of the Samvat which exhibited a rising inflationary period, Axis Securities noted.

On the contrary, the market saw a pickup in the growth theme in the second half, which was led by a cool-off in commodity prices; robust domestic demand, and reasonable valuation after the market correction, the brokerage further stated.

Most sectors in the last one year have witnessed massive correction expect for Nifty Auto and FMCG each up around 5.5 and 4 per cent, respectively. While Nifty Realty slipped most by over 22 per cent, followed by Nifty Pharma down over 11 per cent and Nifty Metal down almost 8 per cent.