The year 2012 has turned out to be a good year for equities, even though the Indian economy faced signs of slowdown. The BSE Sensex, for the first 11 months of the calendar year, gave a return of 27.33% on total return (TRI) basis. India was among the top performing emerging markets.
Broader indices such as BSE 200 and BSE 500 gave returns which was higher than BSE Sensex, a sign that mid-caps and small caps participated in the rally. Some sectors which gave extraordinary returns in this period include Banking, FMCG and Consumer Durables.
Stocks in sectors such as IT, Power and Oil & gas didn’t do as well in 2012. Largely, investors currently favor stocks in consumption sector given some of macro headwinds.
Calendar Year 2012 also saw a deluge of foreign money, possibly attracted by lower valuations and expectation of reforms. This has been a respite for the Rupee, which has depreciated so far during the year by 2.2%.
There was a lot of negative press coverage for India on GAAR, which proposed to tax gains of securities invested through the Mauritius route. The Government also showed its intent to tax Vodafone in spite of Supreme Court ruling in favor of the Company. Fortunately, better sense prevailed within the Government.
Commenting on the outlook, Atul Kumar, senior fund manager, Quantum Mutual Fund said, ''We continues to have a positive outlook for Indian equities. An equity valuation at this point of time looks relatively reasonable. With all the macro noise around us, in the end we are bottom up stock pickers and disciplined value managers. Our challenge remains to understand and analyze businesses, to decipher the valuations ascribed to these businesses in the stock market and to understand the ability of the management to guide these businesses in challenging times. With headlines changing so rapidly, nervous money flows can create interesting opportunities.''
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