Year-Ender 2022: Indian markets outperform global peers; PSU Bank, Auto, FMCG among top winners – know what experts say

Year-Ender 2022: Despite several headwinds on both global and domestic levels, the Indian equity markets showed resilience and turned out to be one of the top performers across the globe against peers, reporting marginally higher returns in the year 2022.

The benchmark indices – Nifty50 and BSE Sensex – each reported over 5.5 per cent gain year-to-date as of December 13, 2022. On the contrary, Mid and Small-cap indices from the broader market registered around 3 and flat returns, respectively, in 2022 so far.

The sluggishness in the markets was due to multiple factors: runaway inflation, which remains outside the target range of most central banks, chunky rate hikes, slowing consumption, commodity pressures, and unwinding of quantitative easing, Sameer Kaul, MD and CEO, TrustPlutus Wealth said in his comment on the market's performance in 2022.

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Besides, the year witnessed the Russia-Ukraine crisis, which resulted in the highest ever inflation in 40 years in major economies like the US & UK, Apurva Sheth, Head of Equity Research, Samco Securities said while citing the headwinds that the equity markets across the globe were impacted.

She added that this was followed by the steepest rise in interest rates by the US Fed which led to a flight of capital from riskier assets.

Compared to Indian markets, global markets such as Nasdaq down by 30 per cent, Hang Seng corrected by 19 per cent, and FTSE was up by a mere 2 per cent, Sumit Chanda, Founder & CEO, of JARVIS Invest said, adding, “We have fared far better than our peers have.”

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Sector-wise, PSUs rebounded strongly, which came as a positive surprise to the market in 2022, Sunil Damania, Chief investment officer, MarketsMojo said. Similarly, Auto also made a smart comeback with the ease in chip shortages and softening of industrial metal prices that provided relief to the sector, he added.

FMCG companies have also had a good run, despite input cost headwinds, the analyst said, adding that even though the rural market experienced a slowdown, FMCGs managed to maintain their topline through calibrated price increases or reduced grammage.

Among all, Information and technology (IT) was a major underperformer due to higher attrition rate, and higher wages impacting margins, among others, Damania said. Besides, offices reopening resulted in rising overhead expenses affecting the sector, he added.

Lastly, Pharmaceuticals was expected to do well, but failed investors' expectations, and significantly underperformed, Damani also noted.

Similarly, Amar Ambani, Group President & Head - Institutional Equities Head, YES Securities was of the view that Bank Nifty was the star performer of 2022 with PSU banks leading from the front, as India witnesses one of the sweetest credit cycle and PSU Banks were available at very lucrative valuations.

Energy-intensive sectors like Cement, Steel faced the brunt of high energy prices and supply chain shocks as an aftermath of the Russia – Ukraine war, Ambani added in his comment.