Markets likely to close 2013 with decent gains - The New Indian Express

Markets likely to close 2013 with decent gains

Published: 28th December 2013 08:18 AM

Last Updated: 28th December 2013 08:18 AM

The past year turned out to be quite constructive for Indian equity. Markets made fresh life time highs on the back of improving domestic macros, supportive global equity and expected governance improvement in India after next general elections. Sensex crossed the level of 21,200 after a gap of almost six years. FII reaffirmed their commitment towards Indian equities with more than USD20 billion invested in 2013.

The benchmark index Sensexlikely to close year end with decent gains. Sensex's YTD returns stoodover 9%.On the other hand, BSE Midcap and Smallcapwitnessed a drop of 6.31% and 11.7% respectively.

On sectoral front, BSE IT surged 60.88% followed by TECK (48.05%), Healthcare (22.81%), FMCG (10.7%), Auto (7.71%) and Oil & gas (3%) were the gainers. However, BSE Realty plunged 31.11%, Consumer durables (24.48%), PSU (19.64%), Power (14.91%), Metal (10.41%), Bankex (8.86%) and Capital goods (5.36%).

Food inflation remained the major contributor to the headline inflation numbers all through the year.After the new RBI Governor Raghuram Rajan took office, the FIIs started to pump in money again. He in his maiden policy on Sep. 20, 2013 unexpectedly hiked repo rate by 25 bps to 7.5%, signaling inflation is top priority for the RBI, which climbed above 6% last month. However, the market participants were expecting status quo on the policy rates. He was seen as a redeemer of the Rupee, which to levels of 70 against dollar, as his initial moves after taking office helped Rupee gain back ground. However, the FII inflow in the equity markets have crossed 1,000 billion till now in 2013 underlining the interest shown in Indian economy.During the initial months of the year, the fear of Federal Reserve started to taper its bond buying program.But the postponement of the activity towards the fag end of the year helped our domestic markets to gain strength and took off from there to new highs. In their recent meeting, US Federal Reserve has started the tapering of their bond buying program as unemployment rates have hit a five year low. US GDP growth rate in last quarter was an impressive 4.1% underscoring a strong macroeconomic recovery.Another major event that took markets to the all time high level was the Assembly election held in five states. The recent opinion polls indicate support building up for Gujarat Chief Minister Narendra Modi led National Democratic Alliance (NDA). There have been several concerns about governance and populist schemes in the last few years and markets are getting excited about prospects of a better government emerging from the next election.The markets will end probably near the all time highs with FII showing immense participation in the on going uptrend, their investment in Indian equities.

Commenting on the outlook, Varun Goel, Head PMS, Karvy said, "We see 2014 bringing a new bull cycle into existence. A good monsoon, strong export sector, continued recovery in US & a stable Euro area are significant positives for equity markets. With domestic macro-economic data also on the mend, we are aggressive buyers of Indian equity. We have a year end sensex target of 24,800."

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