October 11 will remain as one of the major milestones in the journey of the Indian securities market with the Nifty touching the 18,000 level, though it failed to hold on to it in the face of a spurt in selloff by FIIs.
The market has seen a remarkable journey in the last one-and-a-half-year period as it has been crossing every milestone despite any major correction. The BSE Sensex, too, crossed the 60,000 mark on the same day.
That every correction has been giving more power to the market, which resulted into 140 percent gains for the Nifty50 from March 2020 lows till the current 18,000 mark. Almost every sector has seen aggressive participation in this bulls party, while the run-up in the broader market was much higher than frontline indices.
Even the last 8,000-point rally from 10,000 to 18,000 between June 3, 2020 and October 11, 2021 was robust as it created more than 250 multibaggers and more than 96 percent stocks in the Nifty50 closed higher. A multibagger is an equity stock that gives a return of more than 100 percent.
The stunning journey up to 18,000 largely attributed to the improving corporate profitability and economic data points with expected strong festive season, money from foreign as well as domestic investors, reforms by the government, financial stability maintained by the RBI, record tax collections etc, though there is an inflation threat and risk of Fed tapering.
“Nifty touching the all-time high level of 18,000 is a journey. It is not a destination. The market is driven by the triveni sangam of positive sentiment, funds flow from domestic and global investors, and improving corporate profitability. The festival season has begun with a bang and supported positive momentum,” said Nilesh Shah, Group President and MD at Kotak Mahindra Asset Management Company.
Ravi Singh, Head of Research and Vice-President at Share India, said robust company valuations, government reforms, boost-up economic activities, improved macro numbers and strong FII buying have strengthened the confidence of market participants which fuelled the Nifty rally to reach its all-time high.
In the Nifty500 index, 252 stocks generated multibagger returns, including top two stocks – Tanla Platforms and Balaji Amines which gained more than 1,000 percent in the Nifty’s journey from 10,000 to 18,000.
Among others, Adani Total Gas, Indo Count Industries, Adani Enterprises, Adani Transmission, Intellect Design Arena, JSW Energy, Tata Elxsi, Prince Pipes & Fittings, Jindal Stainless (Hisar), Persistent Systems, HFCL, Laurus Labs, Gujarat Fluorochemicals, and KPIT Technologies surged 508-941 percent in last 16 months.
Further, Deepak Nitrite, Birlasoft, CDSL, Cyient, Dixon Technologies, Mindtree, Welspun India, Tata Power, IEX, Adani Green Energy, Tata Motors, Tata Steel, Sobha, Affle India, JSW Steel, IRCTC, Hindalco Industries, Polycab India, Indiabulls Real Estate, Apollo Hospitals Enterprises, Bajaj Finance, JSPL, Larsen & Toubro Infotech, Wipro, Tata Chemicals, Vedanta, Ashok Leyland, Emami, Prestige Estates Projects, Godrej Properties, Bharat Electronics, DLF, IndusInd Bank, State Bank of India, Tech Mahindra, Havells India, Infosys, Jubilant Foodworks, Titan Company, HCL Technologies, ABB India, Ambuja Cements, ICICI Securities, Bank Of Baroda, Avenue Supermarts, and Interglobe Aviation gained between 100-500 percent in the same period.
In last 16 months, IT, PSU Banks, Metals, and Realty generated stellar returns as these indices gained 100-200 percent and most of the multibaggers were from these sectors. Auto, bank, energy, infra, and private bank indices gained more than 70 percent in the same period.
The journey ahead is also expected to be strong as majority of experts believe we are in strong bull run that can continue for next 3-5 years as several reforms announced by the government has built in strong support for the bull run.
“The long-term earnings growth for corporate India is likely to remain healthy as they track the long-term nominal GDP growth. With the government efforts to improve domestic manufacturing through Production-Linked Incentive (PLI) schemes, we see manufacturing getting a bigger push, in addition to services. This may lead to a higher GDP growth over the next few years,” said Jitendra Arora, Executive Vice President and Senior Equity Fund Manager at ICICI Prudential Life Insurance Company.
“Corporate earnings, on an aggregate, should grow in double digits over the next decade and that should translate into market returns,” he said.
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