Big Story: 5 Stock Market Trends of 2022 | Daily News Byte

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2022 is a tale of two visions for the Indian market. Amid a challenging global macro environment, Indian stocks, which gained around 4 percent, outperformed the world (MSCI World down 18.6 percent YTD) and peers (MSCI EM Asia down 21.9 percent). Meanwhile, the S&P BSE Sensex, after three straight years of double-digit returns, has failed to cross that high-water mark in 2022, unlike in 2003-07 or 1988-1994.

While Indian stocks have benefited from resilient fundamentals and de-coupling from global sentiment, the market has been held together by domestic institutional flows year-on-year. This offset heavy outflows from risky foreigners (₹1.22-lakh crore), according to NSDL FPI data, after the US Fed’s most aggressive interest rate hike in a generation.

For investors, this year will be bitter-sweet, and not because of the fear of Covid Redux. Finally, domestic indexes, including most sectors, touched new highs. But at the same time, the stock will lack the same passion and enthusiasm, due to the unequal participation from all the shares. Here’s a detailed look at how the year shaped up for the stock market, the best-performing stocks, as well as disappointments, IPO segments, and more.

A world beater

If there is one word that characterizes the Indian stock market in 2022, it will be Must be RESILIENCE. Geopolitical tensions stemming from Russia’s invasion last February, made prices Oil rises, debt rises as US Fed fights inflation and massive outflows can pull down India’s index.

While India’s growth has been driven by government policies and an increase in domestic capital savings structures, corporate earnings have also helped. At the aggregate level, the 900-odd companies in the BSE AllCap index have shown a 28 percent yoy jump in 12-month net sales and a 15 percent yoy jump in reported PAT, according to Capitaline data.

While the valuation of indices such as the Sensex at a price-to-earnings ratio of 23.4 times (forward) is more expensive than the global market and its own 10-year average (22.6 times), according to Bloomberg data, healthy earnings have helped boost India’s performance. Story.

In addition, the improved macro has helped Indian authorities such as the RBI to conduct monetary policy that is less sensitive to the US Fed, and this has also helped to reduce the sensitivity of the stock market to global growth conditions and oil prices.

Helping the Indian index (Sensex) maintain their performance are market movers, which include ITC, M&M, Axis Bank, NTPC and IndusInd. If it had not been for such obsolescence as a technological package, India’s benefit would have been greater.

The market is at a high level, but not all stocks

The Indian market has remained in the green with gains of 4 percent this year (till December 21) and this is the seventh consecutive year of gravity-defying gains. However, unlike last year’s bull run, there are no fireworks in the middle of the cap and small area. The BSE Midcap index rose 1.3 percent YTD while the BSE Smallcap index actually fell 3.5 percent.

Unlike 2021 when the ‘ATH’ or all-time high rate of increase for both stocks and indices, 2022 is not the same. Sensex (basically closed) hit ATH 9 times out of 242 rounds this year, part of what it did in 2021. This is broadly representative of what happened underneath, where many stocks have faced a similar fate. Therefore, stock selection has paid off.

As a portfolio, such as the 100 largest stocks in terms of market capitalization, saw 20% The highest time spent this year compared to 75% last year. Examples include SBI, ITC, M&M, Eicher Motors, Cipla, Tata Power, Indian Hotels and Ashok Leyland.

In the middle gap, ie, 101st to 250th in mcap, only 15 percent of stocks — including Linde, Vinati Organics, CRISIL, Grindwell Norton, Sundram Fasteners, Blue Dart, CUMI, Elgi Equipments, Radico Khaitan — zoomed to all of them. – High time. This compares to 69 percent in 2021.

The lack of buoyancy is evident in the small caps as well. Fewer than 1 in 10 small caps, such as HBL Power, Automotive Axles, Unichem, India Glycols, Sandur Manganese, Dhampur Sugar, Goodluck and Everest Industries, hit lifetime highs by 2022. By 2021, almost 5 in 10 small caps. -caps hit the maximum lifetime. This represents the risk-aversion identified and the investors who play in the market with low liquidity of the market.

Portfolio Podcast | Key trends of Indian stock market 2022
Portfolio Podcast | Key trends of Indian stock market 2022

Separator evaluation

For investors who invest solely based on valuations such as price-to-earnings (P/E), 2022 has a clear direction. As market sentiment is cautious amid strong selling from overseas, high PE stocks do not perform as well as low PE stocks. Value investing makes a return of sorts.

For example, the basket of 200 stocks with the highest PE (average PE 126) in 2022 gave an average return of -2.5 percent while the group of 200 stocks with the lowest PE gave an average return of 15.1 percent. Therefore, there is a clear gain of 17 percentage points in favor of low PE stocks (average PE of 8).

Low PE stocks like CPCL, Bengal & Assam, Jindal Drilling, West Coast Paper, Rail Vikas, JK Paper, Mazagaon Dock, GE Shipping, HAL, Apar Industries etc. Investors’ money doubled. Overall, 53 percent of low PE stocks delivered positive returns.

Although high PE stocks like Adani group scrips, TajGVK Hotels, Hindustan Foods, JMC Projects, Tejas Networks, Mahindra Holidays and others have done well in 2022, 65 percent of the 200 most valued stocks have posted losses this year. The biggest losers in this list are Deep Polymers, Tanla, Metropolis, Gland, FSN E-Commerce, Nazara, Quess Corp.

Investors in Lost Companies (Based on 2021 Figures) Future Consumers, Sintex Plastics, Dhani Services, Gayatri Projects, Xelpmoc Design, One 97, Sadbhav Engg. And Zomato has been worst affected in terms of YTD losses.

Aatmanirbhar market is strengthened

2022 was the year when FPIs, the dominant force, were net sellers for 8 months out of 12. In total, they sold ₹1.22 lakh crore worth of shares i.e. ₹10,000 crore per month. This shows a very poor mood compared to 2021 when they only got 25,000 billion kip and 1.7 billion kip in 2020.

Factors such as Fed interest rates, historically high valuations of Indian stocks and profit bookings may reduce foreign holdings. But what stands out is the resilience shown by domestic institutions, led by the great confidence expressed by domestic investors in products such as mutual funds. This is the effect of Aatmanirbhar Bharat! Note that in 2008 FPIs withdrew over ₹52,000 crore and the Sensex fell by 52 percent.

Even as FPIs sell Indian stocks incessantly, equity funds in India receive a combined net inflow of ₹1.53 lakh crore or ₹13,900 crore odd each month. This has helped balance the steady selling by FPIs throughout the year. Remember, MF inflows are only part of domestic institutional investment as pension funds, insurance premiums are not included in these figures.

The latest stock data also confirms the strong DII trend. FPI ownership, in value terms, declined by 169 basis points (bps) from 20.72 percent in December 2021 to 19.03 percent in September 2022, according to an analysis covering 1,776 NSE-listed stocks by primeinfobase. During the same period, DII ownership increased by 158 basis points from 13.21 percent to 14.79 percent, due to gains in both MF and insurance ownership. However, the shareholding of direct retail investors remained at 7.33 percent.

The best and the worst

If you look at the BSE Allcap index of around 1,070 stocks, investor wealth grew by over ₹16 lakh crore or 6 percent in 2022. This compares to 35 percent in 2021. Adani Group stocks led the list of big winners, while pharma and technology names Si leads to the laggards.

The list of mid-tier winners is led by Adani Power, UCO Bank, Varun Beverages, BoB and HAL, Indian Bank and Union Bank. The middle tail is led by Brightcom Group, Metropolis Health., Tanla Platforms, Tata Tele. m. and Vodafone Idea. Selling is more obvious in mid caps compared to large caps.

Small caps form the largest basket in the BSE Allcap, with more than 800 stocks. In terms of total investor wealth, small caps have not added any content this year. This shows the uneven nature of the profit of the domestic market. As small caps are the riskiest, the number of stocks that doubled in 2022 to 50 compared to over 200 in 2021. Best performers include Cressanda Solutions, BLS International, Choice International, Ugar Sugar Works, Jyoti Resins, Mazagaon Dock, and Vadilal Industries. About 400 small-cap stocks destroyed investor wealth in 2022.

Although the Indian market saw the largest public issue (LIC), the total fund raising from IPOs this year fell by more than 50 percent to ₹55,146 crore (Jan-Nov 2022) compared to ₹1.18 lakh crore in 2022. The newly listed stocks did not do so well. Of the roughly thirty stocks newly listed on the BSE mainboard, about a third are trading below their IPO prices. The best performers include Adani Wilmar, Venus Pipes, Hariom Pipes, Veranda Learning, Vedant Fashions and Prudent Corporate Advisory. IPO stocks like AGS (down 61 percent), Delhivery (-32 percent), Inox Green (-30 percent), LIC (-28 percent) and Dharmaj Crop (-16 percent) were big losers.

But, SME IPOs saw their best time in four years, with a total of ₹1,660 crore raised in 2022 through 96 offerings. This is more than double the nearly ₹750 crore raised in 2021. The best performing SME IPOs this year were Rachana Infra (up 716 percent), Varanium Cloud (up 646 percent) and Cool Caps (up 596 percent). But more than two dozen IPO SMEs are trading below their issue prices, with the biggest laggards being Pace E-commerce, Ishan International, Global Longlife Hospital, Silver Pearl Hospitality and Naturo Indiabull.



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