Samwhat happens now?
As Samvat 2069 begins, here's what investors should watch out for in the next 12 months
Trading for the New Year Samvat 2069 began at the bourses on Tuesday, November 13, 2012. The first day’s trade was not all that happy and the markets closed in negative territory. The BSE SENSEX lost 51.47 points or 0.28 per cent to close at 18,618.87 points while the NIFTY lost 16.75 points or 0.29 per cent to close at 5,666.95 points.
Samvat 2068 which began on October 26, 2011 and closed on November 12, 2012 saw the SENSEX gain 1,415.48 points or 8.20 per cent. The NIFTY gained 481.90 points or 9.26 per cent to close at 5,683.70 points. The broader indices like the BSE100, BSE200 and BSE500 gained 11.60 per cent, 9.84 per cent and 9.38 per cent respectively. The BSE MIDCAP gained 8.10 per cent while the BSE SMALLCAP gained 2.68 per cent. The year was mixed and had its ups and downs.
The markets were extremely volatile and making money was fairly difficult. The outperforming sectoral indices were BSE FMCG which gained 41.63 per cent followed by BSE HEALTH which was up 27.62 per cent. BSE BANKEX gained 21.41 per cent while the BSE AUTO gained 14.81 per cent. One heard of realty stocks being hammered throughout the year but BSE REALTY was a gainer at 5.30 per cent. BSE CAPITAL just about managed to close in the positive – up 1.32 per cent – and the darling sector BSE IT just about closed in positive at 0.61 per cent. On the losing side, we had BSEPSU down 3.59 per cent and in a year when crude oil prices have been rising, the BSEOIL was down 9.21 per cent. BSEMETAL fell sharply, losing 11.87 per cent.
In individual stocks, the performance has been much more varied. Wockhardt was the clear gainer of the year, up a whopping 277 per cent, moving from Rs 450 to Rs 1,695. United Spirits was another big gainer as a result of the Diageo deal, gaining 117 per cent. In the heavyweight stocks, FMCG majors Hind Unilever gained 54.35 per cent while ITC gained 33.96 per cent. In the midcap space, Amar Raja Batteries gained 151 per cent and Kaveri Seed gained 146 per cent. Titan Industries rallied in the last quarter of the year and gained 35.52 per cent. Jammu and Kashmir Bank was a big gainer — up 65.86 per cent. The losers included Deccan Chronicle, which fell 87.78 per cent to Rs 5.80 against Rs 47.45. A2Z Maintenance was another disappointment as it lost 66.91 per cent to close at Rs 60.15. Suzlon Energy lost 58.23 per cent. In the IT space, Infosys lost 16.87 per cent while TCS gained 21.79 per cent.
The biggest driver was liquidity and FIIs were big buyers. They have invested close to one lakh crore rupees in the period under review while domestic institutions were net sellers of Rs 15,000 crore. The Indian Rupee has been extremely volatile during the period with the current level of Rs 54.88.
So much for the year gone by, but what does Samvat 2069 have in store for the investor? It would be a tough year and one would have to look at specific stocks rather than looking at industries or sectors. Some key issues which would crop up in the coming year would be the effect of the ‘Fiscal Cliff’ in the US. Though President Barack Obama has been re-elected for another term of four years, the Republicans hold the Congress. This would necessitate the two reconciling or coming together to avoid the worst crisis facing the US. Problems in Europe continue and it seems unlikely that they will be resolved very quickly. In India, though general elections are due in May 2014, it would not be out of place to say that there is a strong possibility that they will be advanced and held in Samvat 2069.
The two important events for India, are the introduction of the much-delayed GST and the actual announcement of general elections. The markets would rally strongly on both these counts and they have the potential to move markets. Stock selection would be critical for successful investing in Samvat 2069.
Indian companies have changed their characteristics and are no longer affected only by the events happening in India. Global companies, such as Tata Motors, Tata Steel and Hindalco to name a few, get affected both positively and negatively due to events both in India and around the world. Companies in the pharmaceutical space such as Ranbaxy and Sun Pharma are more global than Indian. They have joined companies in the IT sector and are affected by global cues. One needs to invest in companies which are involved in manufacturing, have global plants built to scale and size and are low cost producers. One must think that the world needs to consume products and the country of origin could always change. Companies from the Pharma, FMCG and IT space look attractive going forward.