Almost every industry has benefited from the boom, with IT and pharmaceuticals leading the way with gains of 69 percent and 58 percent, respectively, since January 2020.
The year 2020 will go down in history as the Indian stock market not only recovered all of its losses from February-March but also brought the gains into the new year, setting a new high in January 2021. From its March 24 trough, the market has nearly doubled.
The BSE Sensex, which has gained more than 20% since January 2020, reached a new high on January 21, 2021, when it surpassed the 50,000-mark.
Investors’ wealth has increased by Rs 44 lakh crore since January 2020, with the BSE market capitalization increasing to nearly Rs 200 lakh crore from about Rs 155 lakh crore in January 2020.
The rally has been due in large part to a flood of money after central banks injected trillions of dollars into the economy to help coronavirus-affected economies recover.
Given better-than-expected earnings, improving economic data, declining COVID-19 infections, a nationwide vaccination campaign, and stimulus measures from the government and the Reserve Bank of India, India earned the most inflow among emerging markets.
Since January 2020, foreign investors have invested about Rs 1.9 lakh crore in Indian equities, while domestic institutional investors have net sold nearly Rs 50,000 crore.
“The strong FPI equity inflow trend that began in 2020 has continued in January 2021, with net inflows of around Rs 24,500 crore so far. There is a small amount of debt outflow. Inflows are expected to remain high in the future, according to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
FPI flows were driven by abundant global liquidity, low interest rates in the developing world, and market consensus that ultra-loose monetary policies will continue in 2021, he said.
Inflows into India are likely to remain high, according to Vijayakumar, as the economy is undergoing a V-shaped recovery and corporate results are outperforming expectations.
“Even though valuations are strong and profit-bookings will occur on occasion, this pattern is likely to continue. FPI preference for IT, telecom, and private financials is reflected in high delivery-based buying,” he said.
Since January 2020, almost every industry has taken part in the race, with IT and pharma leading the way with 69 percent and 58 percent, respectively. In the same time frame, wider markets outperformed frontliners, with the BSE midcap index up 27% and smallcap up 36%.