Nifty gains 20%, Sensex 19% in ’23

Some analysts believe equities will give double-digit returns over the next two-three years

Image used for illustrative purposes only. (Express Illustrations)

NEW DELHI: It has been a remarkable year for the domestic equity market as it defied multiple global headwinds and gave a double-digit return to investors. Despite two global conflicts and inflationary pressure throughout the year, benchmarks - BSE Sensex and NSE Nifty50 - signed off calendar year 2023 by gaining 19% and 20%, respectively. The 30-share index, Sensex, started 2023 at 60,840 to close the last trading session of the year at 72,240 while the 50-share pack Nifty started at 18,105 and closed at 21,731. The two indexes at present are hovering at around their all-time high levels.

Two ongoing conflicts, Russia-Ukraine and Israel-Hamas, and their impact on energy prices left no stone unturned for the bears this year to grip the market. Add to it, subsequent interest rate hikes in the first half by the US Federal Reserve and the RBI, a slowing global economy, US bond yields hitting a decadal high and the dollar index maintaining a firm stance kept investors nervous for most part of the year.

The meltdown in Adani Group Stocks following the Hindenburg Research report in January also impacted sentiments. However, a resilient economy, strong corporate earnings growth and softening inflation in the later part of the year kept the buying interest high. Buying momentum received a big boost after the victory of PM Narendra Modi-led Bharatiya Janata Party in three state elections. The market received another booster after the US Federal Reserve signalled three rate cuts in 2024.

1. “2023 was intriguing for both the Indian and global equity markets. While the year commenced with restrained expectations and volatility in the initial months, the market saw a remarkable recovery in the second half from its March 2023 bottom,” said Pranav Haridasan, MD & CEO, Axis Securities. Haridasan believes Indian economy will continue to stand out in 2024 and equities are likely to give double-digit returns over the next two to three years, supported by robust double-digit earnings growth.

However, few analysts believe the pace of return may slow down in 2024. “2024 is beginning on a high base, hence it may be difficult to expect a similar performance by the time 2024 ends,” said Dhiraj Relli, MD & CEO at HDFC Securities.

The broader indices outperformed benchmarks in 2023 as Nifty Midcap 100 and Nifty Smallcap 100 indices surged 46% and 55%, respectively. Sector-wise, the Nifty Realty index gained more than 80% in 2023. Nifty Auto and Nifty PSU Bank also rewarded investors in 2023.

 Among large stocks, Tata Group shares were again in maximum demand. Tata Motors became the first Nifty stock to double in 1 year as it gained 101% in 2023 while Tata Consumer became the seventh Tata Group Company to have a market share of Rs 1 lakh crore.