The Indian equity market has made a comeback in the past few trading sessions with the benchmark BSE Sensex posting 8% gain in last seven trading sessions, ahead of the earnings season.

Interestingly, if the financial year 2010-11 performance was analysed, for most part of the year, particularly from June to December, Indian market outdid the developed markets and US market in particular. The tide turned in early 2011 though when Indian equity market, along with its other EM counterparts underperformed the developed markets with the developed economies showing sign of sustained economic recovery.

At year?s close, Indian market gave modest returns (10.9%) compared to Dow Jones Industrial Average (DJIA) (13.8%) for FY11 due to a net fund outflow of nearly $2.2 billion during the first two months of CY2011. On an Overall basis, it has been the year of largecaps, with BSE midcap just managing to post a return of 0.9% during the financial year while largecap (Sensex) gave a return of 10.9%.

However, cumulative FII inflows for FY11 at $24.1 billion were still higher by 3% against net inflow of $23.35 billion in FY10. In fact, for the last month of the fiscal, there has been a return of FII money with the Indian market receiving a net FII inflow of about $1.3 billion.

The fiscal also experienced a rise in market activity on the derivatives sgement with ADT (Average daily turnover) growing by 59% to R1.15 lakh crore.

The cash market volumes however declined by 21% bringing down the ADT by 17% to R14, 080 crore. Lack of retail participation have to some extent limited the extent of trade at the cash market, say a set of market experts.

Sector wise, consumer durables benefited the most with the BSE consumer durables index rising one and a half times in FY11. Even FMCG, IT and Bankex indices each gained close to 25% during the period. BSE realty came across as the biggest loser among sectoral indices with a 29% decline during the period.

Amongst large-caps, almost half of the ten scrips which declined the most belonged to construction and realty sectors.

On the other hand, half of the top ten gainers in terms of price belonged to banking and financial services sector. Also, five out of top ten price gainers from the mid-cap space consists companies that have commodity or agriculture focused businesses.