Sensex, Nifty handsomely reward investors in FY24; small-caps surge 70%

The equity investors were handsomely rewarded in financial year 2023-24 as stock markets massively outperformed other asset classes on the back of strong economic growth fundamentals, improved corporate earnings, strong flows from domestic investors in equity mutual fund schemes and robust foreign inflows.

The Sensex surged a whopping 25 per cent in financial year 2023-24 and Nifty 50 index climbed 29 per cent.

Broader markets outperformed their larger peers in a show of secular bull run for Indian equity markets as Nifty Midcap 100 index surged 60 per cent and Nifty Smallcap 100 index advanced staggering 70 per cent, data from stock exchanges showed.

Shares in mid- and small-cap baskets have more than quadrupled for example REC, the state run electrification company, climbed a jaw-dropping 400 per cent. Shares in defence sector and railways like Mazagon Dock, BEML, Hindustan Aeronautics, IRFC, IRCTC and BHEL also more than doubled investors’ wealth.

"The market is all-time high, the investors should stay invested in high-quality stocks with good balance sheets and typically with market leaders. Book profits in stocks that have performed well and are trading at higher valuations than the historical averages. The market's long-term outlook remains unchanged, owing to a slew of favorable fundamentals such as strong FPI inflows, lowering commodity prices, a pick-up in credit growth, healthy bank balance sheets, and the capex resurgence," Arvinder Singh Nanda, senior vice president of Master Capital Services.

India remained fastest growing major economy of the world recording a growth rate of 8.4 per cent in December quarter thereby attracting global eyeballs and that was reflected in robust funds India attracted from global investors.

Foreign portfolio investors (FPIs) bought shares worth Rs 2,04,169 crore in financial 2023-24 after they remained net sellers for two consecutive years. FPIs sold shares worth Rs 37,632 crore in FY2022-23 and a whopping Rs 1,40,010 crore in FY2021-22, data from NSDL showed.

"For fiscal year 2025, India stands firm as an attractive hub for investments. A confluence of factors, such as robust economic expansion, potential reductions in interest rates, and consistent market valuations, bolster this perspective. In the short term, there could be some volatility, especially in an election year. However, investors should view this as an investment opportunity. We are bullish on PSU, Renewable Energy and healthcare, each presenting compelling growth prospects," Nanda added.

Sectoral gainers and losers

All Nifty 50 shares, barring two stocks, gave positive return to investors with shares like Hero MotoCorp, Bajaj Auto, Tata Motors, Coal India and Adani Ports more than doubling investors wealth. All these shares rose in range of 101-136 per cent.

On the flipside, HDFC Bank and Hindustan Unilever were among the notable losers with a negative return of 11 per cent each.

What's particularly striking is the broad-based nature of this rally, with all sectoral indices posting gains over the fiscal year. Sectors such as realty, PSU, power, and auto emerged as frontrunners, witnessing a substantial growth.

Additionally, a major portion of Nifty constituents, comprising 11 stocks, have recorded gains within the range of 60 to 90 per cent over the fiscal year. This diversity in performance across various sectors and stocks reflects the underlying strength and resilience of the Indian equities market.