2009 PROVED TO BE THE BEST YEAR FOR THE MARKETS SINCE 2000

AHMEDABAD: With returns on investment more than 79%, 2009 calendar year emerged as the best year for investors since 2000. Even as three trading sessions are yet to go, the benchmark Sensex closed on its 18-month high on Thursday at 17360. FII’s have once again proved to be the frontrunners in terms of the inflow, pumping more than Rs 82,000 crore in the Indian market this calendar. For the first time ever, the Sensex witnessed the upper circuit limit of 20%, halting trading for the whole day. It was this year that market capitalisation of Indian bourses doubled (till December 24th) from $0.63 tn to $1.28 tn.

While a financial scam from the promoters of prestigious IT firm Satyam Computers and a four-year-low market in March 2009 rattled the players in the arena, analysts observe that 2009 represents the year of great recovery and re-establishment of India growth story on the global map.

“It is a year of grand recovery of Indian economy . We have seen re-establishment of the India growth story which brought back FIIs towards India,” says D D Sharma, senior VP, Anand Rathi Securities. According to him, those who doubted the market, lost chance to make money. To recall, majority market participants were not convinced about the recovery during the early phase of the revival even as the market continued its upward ride post-March 2009.

Analysts note that even now, some retail participants like retail investor Jayesh Mehta for instance, are skeptical about the market and prefer to stand aside and not invest a pie of their hard-earned money for the moment. Mehta who liquidated his whole portfolio when the Sensex was at the 15,000 level in June 2009, has been awaiting for the correction to re-enter , but hasn’t found an opportunity so far. “After the 2008 fiasco, I don’t want to burn my fingers again and hence, am being extra cautious,” he says.

City based sub-broker Mayur Shah observes : “Investors are too careful at the moment and are not ready to lose money the way they did duringthe meltdown. So they are taking very small positions for the short to medium term. Majority of my clients have sold holdings in their respective portfolios without taking profit-loss in the consideration in 2009.”
Sharma notes that post-mid-March 2009 the market has not seen big correction to encourage retail investors.

“It isn’t that retailers aren’t convinced about the booming market. Considering no big correction is happening, retailers are hesitant to buy at a cheaper rate,” he points out. Sharma however, quips and adds that with sentiments changing, the market is seeing participation of FIIs, DIIs, HNIs and retailers . “We will see new high in the Sensex during 2010 calendar. FIIs flow will remain robust . Also internal inflow is very important and so valuation could go up further,” Sharma says.

Tracing back Sensex’s story in 2009, VVLN Sastry, Country Head, FirstCall India Equity advisers adds, “It was a year of smart financial recovery from Indian perspective. Sensex’s ride from the 8,000 to 17,000 above was an exceptional journey.” “What distinguished India from other economies, was its growth story. Basically, insulated banking system of the country rescued India from the meltdown,” he adds.

Analysts believe that worst has past. “We are going to see Sensex at 22,000 level – a new high in year 2010 – sometime during the second quarter. If there will be any correction then it will not last long as inflow is expected to rise during next year,” he says.

During last calendar(2008) FIIs sold shares worth of more than $13 bn. Indian market has emerged as a clear winner as it has outperformed its Asian peers in the same period . Chinese stock market is showing 73% return while Hon-Kong market is showing return of 50% till data during the calendar.

Source: www.economictimes.indiatimes.com

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