MUMBAI: The Nifty and the Sensex topped 20% returns in 2021 and were among the best-performing assets aside from cryptocurrencies. But, investors who pumped money into midcaps made better returns than those who invested in blue chips.
By ranking, the controversial crypto Bitcoin has generated the highest return of 2021 for resident Indians among six popular assets they invested or traded-in. Gold and silver, two other important investment avenues, generated negative returns last year.
The Bitcoin (64% return) was followed by midcap stocks on the returns chart, as reflected by the Nifty Midcap 100 (46%), Nifty 50 (24%), Sensex (22%) and the Bank Nifty (13.5%). The jury is out on whether cryptos will continue their outperformance with the government yet to pass The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
Sebi chief Ajay Tyagi also said recently that the market regulator wouldn’t encourage mutual funds to launch new fund offers based on cryptos until the government clears the air on their regulation. Indians hitherto invested in Bitcoin through domestic mutual funds under the Liberalised Remittance Scheme (LRS) which permits residents, including minors, to invest $250,000 per person per year in specified overseas assets.
On stocks, returns on Nifty could moderate to around 15% in 2022, believes Chandan Taparia, vice president (research), Motilal Oswal Financial Services, amid “rising inflationary expectations” and “probable” rate hikes by RBI and the US Fed next year, which could temper FII inflows.
Sunil Pachisia, head of institutional sales, Pratibhuti Vinihit, expects midcaps to outperform in 2022, given improved earnings and higher investments by fund houses. “Banks have underperformed the broader market and unless they begin to perform the Nifty returns could lag that of the midcaps in 2022,” he added.
