Dalal Street in 2022 may have been marred by the global macroeconomic risks and geopolitical tensions, but BSE Sensex managed to give positive returns for 4 consecutive years if the period of budget-to-budget is considered to gauge the performance.
The 30-stock index has given double-digit returns in the February 2020-21 and February 2021-22 period. fSince the last budget, the performance of the index was muted, but it has still managed to give 3.5% returns, data from Ace Equity shows.
Among sectors, three of them have joined Sensex in giving positive returns for 4 consecutive years. These are banks, financial services, and energy.
Barring the February 2020-21 period, the S&P BSE Bankex index has given double-digit returns in the remaining three years.
Since the last budget, the S&P BSE Financial Services index has given moderate 6% returns, but between the 3 budget periods prior to 2022, the index has gained 10-15%.
The S&P BSE Energy index has done phenomenally well, having gained more than 17% since the last budget, and outperforming most of the sectoral indices.
If not for the sell-off in Dalal Street, atleast 5 sectors would have extended their winning streak to the fourth year.
The commodities-related companies, consumer durables and discretionary companies, realty, and information technology succumbed to selling and lagged the other sectors in the last 1 year.
The spike in commodity prices following Russia’s invasion of Ukraine, spiralling inflation, and steep rate hikes by central banks hurt consumption significantly and hurt consumer durables and consumer discretionary firms.
The macroeconomic risks saw foreign investors dumping high-value yielding IT stocks and park money in haven assets like the dollar.
Can Sensex be lucky the 5th time?
It is difficult for most experts to predict how markets will do over the next one year at this juncture, given that macroeconomic headwinds persist globally.
While India’s growth story remains strong and experts are bullish on the long-term prospects of the domestic economy, they do see risks to outperformance of Sensex vis-a-vis global peers in the near term given high valuations.
“Our bottom-up approach to equity valuations leads us to a conclusion that Indian equities are expensive vis-à-vis stocks in many other markets, including other EMs such as China and European markets such as Germany and UK,” said Kunal Kapoor, CEO of Morningstar.
Moreover, this would be the last budget of the incumbent government ahead of the general elections in 2024. Therefore, market performance will hinge on how the above mentioned risks pan out.
(Data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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