Investor wealth soars 27% to over Rs 67 lakh cr

Investor wealth soared by 27 per cent to around Rs 67.7 lakh crore (Rs 67.7 trillion) in 2012 with the stock indices gaining nearly 25 per cent on hefty capital inflows and of late a slew of reform measures even as concerns remain over economic growth and rising fiscal deficit.

Indian bourses made a dramatic turnaround after a meltdown in 2011, leaving behind strong optimism about a bullish 2013 in hopes of Reserve Bank of India rate cut, hefty capital inflows, a recovery in global economy and excellent earnings growth in the third quarter of 2012-13.

The smart recovery helped investor wealth to soar by over Rs 14.5 lakh crore (Rs 14.5 trillion) to Rs 67,78,609 crore (Rs 67,786.09 billion) on December 21, 2012 against Rs 53,12,875 crore (Rs 53,128.75 billion) at the end of last year.

The Q3 earnings, which are most likely to beat the market pundits, indications of more reforms by the United Progressive Alliance government and hopes of increase in retail participation in quality IPO/FPO and OFS in the near future expected to augment the bullish fervour in 2013, an analyst said.

The BSE sensitive index Sensex posted impressive gains of 3,787 points, or 24.5 per cent, at 19,242 on December 21, 2012, against preceding year-end's close of 15,454.92 points.

The Sensex had lost 5,054 points, or over 24 per cent, during 2011.

The National Stock Exchange's Nifty also spurted by 1,223 points or 26.5 per cent to 5,847.70 on December 21, 2012 from previous yearend's close of 4,624.30.

Investors ignored dwindling industrial output, declining exports, ballooning fiscal deficit, overall gloomy economic atmosphere in domestic and international markets amid fear of European debt crisis to spiral over world wide.

Foreign institutional investors made the second largest investment in the Indian capital market in the year under review.

As the Securities and Exchange Board of India data, FIIs pumped in Rs 1,21,652 crore (Rs 1,216.52 billion) or $23.15 billion this year till December 21.

Previously, they had made biggest investments of Rs 1,33,266 crore (Rs 1,332.66 billion) or $29.36 billion in equities during 2010.

Kishor P Ostwal, CMD of CNI Research Ltd said a few big investors made a large profit in the market as select stocks scored new highs in view of paucity of floating stocks.

However, retail investors were not benefitted either in the secondary market IPO market and were seen selling their holdings, as a result the public ownership in the India Inc came down to 6-7 per cent as against a high of 15 per cent 2007,

he said.

Though the Sensex could not surpass its all-time peak registered in 2008, the sectoral indices like BSE-FMCG, BSE-HC, BSE-CD and BSE-Auto logged their historical highs during the year on hectic buying by foreign funds.

Analysts said at the beginning of 2012 investors feared of further slide in view of corruption scams.

However, the market surprised everyone by rising almost 1,739 points or 11.25 per cent, largest monthly rise in absolute term in the month of January in any calender year, following hectic buying by Foreign funds.

It was also the biggest monthly performance since September 2010 when it had gained by 2,098 points or 11.67 per cent.

The rally in the month was driven by strong global cues on hopes of some stabilidation in the Europe and gradual improvement in the US economic data.

On domestic front, the government's decision to allow Qualified Foreign Investors to invest directly in local equities from January 15, 2012 and signs of more foreign funds inflow also underpinned sentiment.

The Union Budget, which was delayed this year because of the Assembly polls in five states, presented by then Finance Minister Pranab Mukherjee on March 16 failed to enthuse the investors and plans to revive the economy.

The market then turned negative and remained dull for the next few months due to slowdown in gross domestic product growth, worries over macroeconomic conditions due to higher global crude oil prices, as India imports two-third of its oil consumption, rising trade deficit, weakening currency and global uncertainty.

Fears that reform process may take back seat after the ruling Congress party suffered a setback in some states in March and cut in China's growth target also weighed on the market sentiment.

Revival of monsoon at the fag-end and Moody's retaining stable outlook on India supported the weak stock markets.

Moreover, announcement of reform measures such as allowing FDI in multi-brand retail and downsizing the LPG subsidy by the government later pushed the Sensex higher since September.

The Sensex moved in a range of 19,612.18 and 15,358.02 before ending at 19,242.00 on December 21, 2012, displaying a rise or 3,787.08 points or 24.50 per cent.

The wide-based S&P CNX Nifty of the NSE also flared up by 1,223.40 points or 26.46 per cent to settle at 5,847.70 on December 21, 2012.

On the global front, barring China which ended in the red, rest of the other Asian markets ended firm. European as well as US stocks too exhibited strong trend this year.