Nifty and Sensex profit up to 88% since the 2020 lockdown; more than 250 stocks turn Multibaggers
COVID-19 broke out throughout the world over a year ago. Taking everyone by surprise, it forced governments to take serious measures and impose worldwide lockdowns.
Indian Prime Minister Narendra Modi announced a nationwide 21-day lockdown starting March 23rd, 2020, which kickstarted a strong selloff in the equity market as economic indicators fell down to the negatives.
In the months that followed, the unlock phase started, due to enormous infusion of liquidity and low rates globally. Because of this, the equity market started to build up gains.
The market has come a long distance since then. Sensex, its main barometer, has gained over 86% and Nifty over 88% since the start of lockdown on March 23rd, 2020.
Gaurav Garg, Head of Research, CapitalVia Global Research said, "In financial year 2021-22, we can expect the market to continue its upward trend, because since October 2020, all economy-related sectors like banks, NBFCs, capital goods, metal & mining and real estate have been performing well."
Data from Ace Equity shows that more than 250 stocks have turned multibaggers. Tanla Platforms has inflated more than 2,000% while Adani Green Energy, Adani Total Gas, Adani Enterprises, Vaibhav Global, Aarti Drugs, Dixon Technologies (India) and Hindustan Copper have reached between 500% and 800%.
Metal, auto and IT are a few of the sectors that have gained the most in this period while FMCG, pharma and PSU banks have underperformed.
The way ahead
The market is currently being corrected and according to analysts, it may witness volatility in the short term. Regardless, the long term outlook of the market looks positive.
The coming days of the market look bright, with economic indicators pacing forward, and the ongoing vaccination and central bank's comments of keeping rates low in the year 2021.
Garg adds, "If we do not get expected earnings growth for the last quarter of FY21, the market may witness some correction from the higher level. The market is also witnessing some selling pressure at the current levels, as the bond yields are getting higher. However, the long term story is intact and we expect to get double digit returns from the market in next FY as well."
Gaurav Dua, SVP, Head - Capital Market Strategy, Sharekhan by BNP Paribas, another one of the experts, is a little more conservative. He pointed out that the benchmark indices have given up bulk of the gains from the post-Budget rally.
According to him, "The resurgence of COVID-19 and volatility in bond yields have created uncertainty related to the pace of economic recovery going ahead. However, the market positioning is quite light and valuations are turning more reasonable after the correction. We expect the market to find support around the current level.".
Analysts advise using the current correction to buy quality stocks, since the long-term scene of the market is positive.
“Any sort of knee-jerk reaction is going to be an interesting opportunity for investors to buy in,” Pramod Gubbi, Co-founder of Marcellus Investment Managers, said in an interview with CNBC-TV18.
His prediction says “There are a lot of investors, who feel that they have been left out in this rally in the past 12 months. They have been waiting for the correction to get in and if we see a meaningful correction, a lot of those investors will jump in as well.”