Unlike the previous year, 2020 has seen a broad-based rally instead of a selective one, with midcap and smallcap indices too joining the party.
The last trading session of 2020 witnessed both the benchmark indices scale fresh all-time highs, yet again. Reflecting back on 2020, the year has been a tumultuous one, with Dalal Street standing witness to a year where Sensex and Nifty tanked disastrously in March and then not only recovered all losses but even surpassed their previous record highs. For investors, Sensex and Nifty have gained for the fifth and fourth year, respectively. Sensex is up 15.69% year-to-date while the 50-stock NSE Nifty is up 14.8%. However, unlike the previous year, 2020 has seen a broad-based rally instead of a selective one, with midcap and smallcap indices too joining the party.
Broader markets participate
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Sensex and Nifty started the year at 41,306 and 12,182 points, respectively. Soon both the benchmark indices hit their respective all-time highs, only to slip late on as the coronavirus became a pandemic and forced the world to stay indoors. However, since then the recovery has been phenomenal. After hitting respective lows in March, both Sensex and Nifty have registered gains in all months except May and September.
For broader markets, 2020 has been better than the previous year. BSE Midcap index zoomed 19.55% this year while BSE Smallcap index surged a massive 31%. On the other hand, the Nifty midcap 50 gained 23% this year while the Nifty smallcap 100 index jumped 21%. “As 2020 draws to a close, the Nifty, Nifty Midcap 100 and Nifty Smallcap 100 are up 14.9%, 21.4% and 21.9 % respectively for the year. More importantly, the Nifty is up 83% from the March lows. This is a spectacular rally,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Bank Nifty, although saw a remarkable journey since the beginning of December, is likely to end down 2% year-to-date. The Nifty Pharma index was the best performer in 2020, up 60.2%, followed by the Nifty IT index, up 54%. Both IT and Pharma stocks gained in the initial months of the lockdown while other sectors were still struggling to find their base. Nifty Auto index gained 12%, Nifty Financial Services jumped 4.3% while the FMCG index is up 13.3% so far this year. Nifty Metal jumped 15.2% while Nifty Realty is up 3.84% year-to-date. The only indices to register losses in 2020, apart from Nifty Bank are Nifty Media Nifty PSU Bank, NIFTY Private Bank. The PSU Bank index is down 30% so far, however, since the end of October the index has zoomed 40%.
Target for 2021
“The twists & turns in the pandemic, the vaccine, recovery in growth & earnings, the coming budget, monetary policy, the monetary stance of the Fed… all will influence and impact the market. Investors may partially book some profit but remain invested in high-quality names, particularly in private sector banking, IT, telecom, pharma & consumer goods,” V K Vijayakumar added. For 2021, global brokerage firm Morgan Stanley has a target of 50,000 points for S&P BSE Sensex. Goldman Sachs expects the 50-stock Nifty to claim 14,100 by the end of 2021. Asia equity strategists at BNP Paribas expect Sensex to touch 50,500 in 2021.