Sensex Clocks Over 14% Return In 2019, Its Biggest Annual Gain In Two Years

Domestic stock markets broke multiple records in year 2019 with the benchmark S&P BSE Sensex index scaling the peaks of 39,000, 40,000 and 41,000 for the first time ever. A number of events, starting from a full rebate for individuals with income up to Rs 5 lakh, to first the imposition of higher taxes on foreign investors, and then a corporate tax cut caught the markets by surprise while global cues such as negotiations on the US-China trade front pushed many investors on the back foot during the course of the year, say analysts.

Domestic stock markets broke multiple records in year 2019 with the benchmark S&P BSE Sensex index scaling the peaks of 39,000, 40,000 and 41,000 for the first time ever. A number of events, starting from a full rebate for individuals with income up to Rs 5 lakh, to first the imposition of higher taxes on foreign investors, and then a corporate tax cut caught the markets by surprise while global cues such as negotiations on the US-China trade front pushed many investors on the back foot during the course of the year, say analysts.

Here's how the share markets fared in 2019:

In 2019, the S&P BSE Sensex registered a gain of 14.38 per cent - its best annual gain in past two years. The broader NSE Nifty benchmark clocked a return of 12.02 per cent. In December alone, it broke a series of records to hit an all-time high of 12,293.90, seven months after crossing the 12,000 mark for the first time ever (May 23, 2019).

Out of the Nifty 50 basket of shares, 22 stocks logged gains in 2019. Bajaj Finance, ICICI Bank and Bharti Airtel emerged the top percentage gainers on the index, up 60.09 per cent, 49.63 per cent and 45.86 per cent respectively.

Top Nifty Gainers/Losers In 2019

However, select large cap stocks led the journey while broader markets lagged. Midcap and small cap stocks underperformed their larger peers. 

For the year, the S&P BSE Midcap and Smallcap indices dropped 3.05 per cent and 6.85 per cent respectively - a second straight year of downward movement for both. In 2017, the midcap gauge had risen 48.13 per cent and the smallcap index 59.64 per cent.

The year 2019 was also characterised with few wild moves as the Street reacted to Lok Sabha elections, the first full Budget of the NDA government after its return to power and announcements such as a cut in corporate taxes, say analysts. Economic slowdown, soaring inflation and aggressive easing of monetary policy drove investor sentiment.

The benchmark index closed 0.99 per cent lower on July 5, the day the government Union Budget unveiled its budget. Analysts say the government's announcement that foreign investors will be taxed at a higher rate hurt investor sentiment. The Sensex extended its fall and closed 2.01 per cent lower the next day.

In August, the government withdrew the higher taxes on foreign investors - as announced in the Union Budget in the previous month - pushing the Sensex 2.16 per cent higher the next day.

The government's move to lower the corporate tax rate to 22 per cent from a base rate of 30 per cent - lowering the effective new rate including all additional levies to 25.2 per cent from 35 per cent - triggered a jump of 2,284.55 points (6.33 per cent) in the Sensex. That marked the biggest single-day gain in the Sensex since 2009.