A day before Prime Minister Narendra Modi announced one of the strictest lockdowns to curb the spread of Covid-19, on March 24, 2020, the NSE Nifty 50 index fell the most in a day on record.
Hours before the prime minister’s address that day, the index fell to 7,511 before recovering by around 300 points.
A year later, the index hasn’t only recovered all of its losses it sustained last year but has nearly doubled since then. That came on the back of a gradual opening up of the economy, pent-up demand, a rebound in corporate earnings and a gush of inflows from foreign investors.
Over the last 12 months, the Nifty 50 has gained 95% and is at present 4% off its all-time high of 15,431—when all the index’s constituents have returned positive gains to investors. Gains were led by Tata Motors Ltd. and Hindalco Industries Ltd., while Coal India Ltd., Indian Oil Corp. and Hindustan Unilever Ltd. generated the least returns during the same period.
Among the 50 index constituents:
- 21 doubled or more than doubled over the last 12 months.
- 21 returned gains of between 50-100%.
- Only Coal India returned gains in single digits (5.8%) to investors.
Nifty Bank: A Year Later
The banking index’s recovery was slower, amid asset quality worries and uncertainty over the RBI-mandated moratorium on term loans. While the index managed to recover most of its losses, it posted negative returns of close to 3% for 2020.
The index recovered all of its losses at the start of 2021, when it closed above 32,161 for the first time on Jan. 12, 2021.
The union budget provided further impetus, when it rose to a record of 37,708 on Feb. 16 this year. Even as it has fallen 10% since then, the index is up over 100% for the last 12 months and has outperformed the Nifty 50.
Six out of the 12 constituents of the Nifty Bank index have doubled over the last 12 months. Stocks like Federal Bank Ltd. and HDFC Bank Ltd. have nearly doubled during this period while state-run Punjab National Bank witnessed gains of around nine percent.
The Broader Markets
The broader markets have outperformed the benchmark indices over the last 12 months. While the Nifty Midcap index has returned gains of over 116%, the small-cap index rose 144% since March last year.
As many as 97 out of the Nifty Midcap index have returned gains to investors, with only three, Yes Bank Ltd. (-62%), Future Retail Ltd. (-45%) and Rajesh Exports Ltd. (-14%), trading at levels lower than last year. Within the 100-constituent small-cap gauge, Omaxe Ltd. was the only laggard.
While gains on the midcap index were led by stocks like the Adani Group companies and some private financial firms, small-cap firms like Dixon Technologies Ltd. and Laurus Labs Ltd., which were the best performers of 2020, were the top gainers.
The Sectoral Picture
The Nifty Auto, Nifty I.T. and Nifty Metal indices have doubled from the lows of last year. While the realty gauge has nearly doubled, all other indices, barring the FMCG index, have returned gains in excess of 50% over a year earlier.
All constituents of sectoral indices like auto, FMCG, IT, pharma, media, metals, pharmaceuticals and PSU banks generated positive returns over the 12-month period. Omaxe was the only constituent of the realty index that posted losses year-on-year.
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