In the past five years, capital markets in India have witnessed bull and bear phases.
- By Ved Malla
In the past five years, capital markets in India have witnessed bull and bear phases. The bulls accounted for most of the five-year period; however, Q1 2020 completely changed this landscape. Due to the COVID-19 outbreak, capital markets have taken a beating both globally and locally in India.
Exhibit 1 and 2 showcase the five-year returns for India’s leading size indices.
Exhibit-2: Index Total Returns
From Exhibits 1 and 2, we can see that the returns were promising for large-, mid-, and small-cap segments through December 2019; however, the scenario completely changed in Q1 2020. The returns of the large-cap segment were better than the small- and mid-cap segments across the five-year period. The S&P BSE SENSEX, which comprises the 30 largest and most liquid BSE-listed companies in India, outperformed all size indices.
Exhibits 3 and 4 showcase returns for the 11 leading sector indices in India in the past five years.
Exhibit 4: Index Total Returns
From Exhibits 3 and 4, we can see that the S&P BSE Energy and S&P BSE Fast Moving Consumer Goods posted promising returns, while the S&P BSE Healthcare, S&P BSE Telecom, and S&P BSE Industrials posted negative returns for the five-year period. All the sectors had negative returns in the Q1 2020.
To summarize, we can say that the bulls had their way during most of the five-year period across all sizes and most sectors through December 2019; however, due to the COVID-19 outbreak, things went south at Dalal street as markets tumbled across all sizes and all sectors during Q1 2020, especially during March.
- (Ved Malla is Associate Director, Product Management & Compliance for SPDJI. Views expressed are the autor’s own)