Samvat 2065 ends with 104% gains

Infra, metals and auto lead the pack Coimbatore: "If somebody had predicted that the sensex would yield 100% returns in Samvat 2065 last Diwali, nobody would have believed,'' said the equity head of an investment firm, reflecting on the stupendous growth in the capital markets in the last few months. Observers agree that nobody anticipated the markets to stage such a strong comeback in a short period given the economic conditions in the aftermath of the global meltdown.      There was gloom all around last Diwali with the global financial crisis taking the wind out of the sails of the Indian market. The sensex, which hit a high of 21,207 on January 10, 2008, nosedived 59.8% in nine months as panic stricken foreign investors pulled out a whopping $10.4 billion in fiscal 2009. It slumped to a 52-week low of 7,698 points during 'Muhurat' trading last year before closing 103.5% higher.      The sensex has spurted 125% from last year's low ironically on the back of strong foreign inflows that have crossed $13 billion so far this year. "The entire rally has been driven by (global) liquidity,'' said a top official at the India arm of a Europe-based asset management firm.      "The liquidity is not getting out of the system as (earnings) growth has surprised on the positive side. Valuations are also not that extravagant,'' he said. "Markets have bounced back from its lows, on back of the rebound in economic activity and improved corporate performance,'' said Dinesh Thakkar, CMD, Angel Broking.      While all the sensex stocks gave positive returns in Samvat 2065 infrastructure, automobile and metal scrips have gained the most. Telecom and IT stocks were the laggards among the pack. Jaiprakash Associates notched up the highest return of 387.8% followed by Tata Motors (313%) and Sterlite Industries (280.4%).      Sun Pharmaceuticals grew the least delivering a 15% return followed by telecom majors Bharti Airtel (15.5%) and Reliance Communications (16.7%), which are facing stiff tariff competition from new entrants.      If you had put your money in sensex stocks last Diwali 16 out of the 30 scrips would have at the least more than doubled your investments. While two scrips have more than quadrupled since last Diwali, prices of four stocks have more than trebled. However, more than a third of the sensex constituents (11 stocks) have underperformed the benchmark index during the period.      Will the good run continue? Market observers are cautiously optimistic. "With economic activity picking up, we believe that India Inc would be able to deliver a 15-20% earnings growth. Devoid of any rerating of the Indian equities, the markets can deliver 15-20% returns,'' Angel's Dinesh said.      "Domestic as well as global markets appear tired now, but till crucial levels are breached, anticipating any correction could be disastrous,'' according to D D Sharma, senior vice president, research, Anand Rathi financial services. "Liquidity and earnings would decide the momentum,'' observers said. Now, all eyes are on Samvat 2065.