Equity Investors Gain Rs 14 Lakh Crore in 6 Months

During the first half of 2023, investors on Dalal Street, the Indian stock market, experienced a significant increase in wealth, with a collective gain of Rs 14.07 lakh crore. This surge in wealth was primarily driven by foreign institutional investors' continued buying activity. The benchmark BSE Sensex, a key stock market index, soared by nearly 3,878 points or 6.37 percent, reaching a record close of 64,718.56 on June 30. Similarly, the NSE Nifty index, comprising 50 major stocks, rallied by 1,083.75 points or 5.99 percent, setting a new record at 19,189.05.

The market capitalization of companies listed on the BSE also witnessed a notable increase, rising to Rs 296.46 lakh crore on June 30, 2023, compared to Rs 282.38 lakh crore at the end of December 2022.

Several large-cap stocks showed remarkable performance during the January-June period. ABB India emerged as the top gainer with a rally of over 60 percent, followed by Cholamandalam Investment and Finance Company and Tata Motors, both of which gained more than 50 percent. Other notable gainers in the large-cap segment included Hindustan Aeronautics, ITC, Siemens, Trent, Interglobe Aviation (IndiGo), Bajaj Auto, and DLF.

In the mid-cap space, stocks such as KPIT Technologies, PB Fintech, Power Finance Corporation, REC, L&T Finance Holdings, Polycab India, Mahindra & Mahindra Financial Services, and Cummins India also experienced substantial gains, ranging from 35 percent to 60 percent.

The small-cap and micro-cap segments witnessed impressive performances as well. Companies like Remedium Lifecare, Pulsar International, Taylormade Renewables, K&R Rail Engineering, and SVP Housing witnessed significant rallies, with gains exceeding 500 percent. Blue Cloud Softech Solutions, Kintech Renewables, Softrak Venture Investment, JITF Infralogistics, and Sheetal Diamonds were among the other major gainers in the small-cap space, with rallies of over 200 percent.

Foreign institutional investors made substantial investments in equities during the first half of 2023, amounting to over Rs 60,000 crore. Domestic institutional investors also participated actively, with net investments amounting to Rs 83,964 crore as of June 28.

The IPO market also showed positive signs, with several companies experiencing strong performances after their listings. Exhicon Events Media, for example, witnessed a significant increase, trading at Rs 215.65 on June 30, up almost 237 percent from its issue price of Rs 64. Other notable IPO gainers included Dev Labtech Venture, Mankind Pharma, Retina Paints, Maiden Forgings, Sealmatic India, Divgi Torqtransfer, SVJ Enterprises, Bright Outdoor Media, and Macfos.

In terms of valuations, the Sensex traded at a price-to-earnings (P/E) ratio of 23.62 times on June 28, which was lower than its five-year average of 26.15 times and the ten-year average of 23.29 times.

Among the sectoral indices, the Realty and Capital Goods sectors performed exceptionally well, with gains exceeding 20 percent year-to-date. The Auto, FMCG, Healthcare, and Consumer Durables sectors also saw significant rallies, ranging from 7 percent to 20 percent.

In global markets, Japan's Nikkei 225 index outperformed other major indices, with a gain of nearly 25 percent year-to-date. Germany's DAX index and the French CAC40 index also experienced positive growth, up 14 percent and 12 percent, respectively. In contrast, the US Dow Jones Industrial Average index rose by 2.35 percent during the same period.

Looking ahead, market experts suggest remaining invested in the market, particularly for long-term investors. While valuations may be rich from a short-term perspective, profit booking can be considered for investors with a shorter investment horizon. High-quality financial stocks are still considered to be trading at fair valuations.

Gaurav Dua of Sharekhan by BNP Paribas recommends stocks such as Bharti Airtel, L&T, M&M, SBI, and Titan Company for an investment horizon of 18-24 months. In the broader markets, he is positive on APL Apollo, Gabriel India, Jupiter Wagon, Himatsingka Siede, and Mahindra CIE.