Key events which shaped the Indian stock market in 2017

The calendar year 2017 was an impressive year for equity markets as the 50-share NSE Nifty was up 28%, largely driven by liquidity following likely continuity in economic policies, government reforms, improvement in corporate earnings and also the positive global environment.

The BSE Sensex is already up over 26.71% this year, Nifty is Up 29% since it made this well-known low on Dec 26, 2016. The major trigger for markets has been the rush of liquidity from domestic investors, which experts claim has taken them far above what current fundamentals justify.

Key events which shaped the markets in 2017

Just last year, demonetization of high-value currency notes affected markets and earnings because of its tremor value. This fiscal year, the goods and services tax (GST) got added as another disruptive reform that risked upending progress in the near term. With the macro image appearing somber, one might expect that the stock markets too should exhibit a funereal atmosphere. However, stocks of JSW Steel, Jindal Steel and Power, Vedanta, National Aluminium, and much more were big gainers due to GST. Perhaps, ITC was one of the biggest losers under the new GST tax plan. You can check out the GST and its impact on stocks in our blog for more detail.

Key events which shaped the markets in 2017

JSW steel after GST

 

Key events which shaped the markets in 2017

ITC after GST

 

The ruling Bharatiya Janata Party (BJP) registered substantial victories in state elections this year. Earlier in March, it won a two-thirds majority in Uttar Pradesh, The size of the victory emerged as a surprise as the Nifty pulled off an all-time closing high of 9,087 and the Sensex raced to a two-year high in March. The bullishness in Indian markets comes after nearly three years. In 2014, the Nifty had risen 14% (from January 1 to May 16) in anticipation of the BJP’s victory in the Lok Sabha elections that year. From there, however, it found it tough to close above the coveted 9,000 mark. It made an effort twice, once in 2015 and then in 2016, but dropped short each time. Therefore, this attempt was special.

Once again, before the Uttar Pradesh Assembly election results, the Nifty was near to striking the mark, having risen 9% in 2017. Thus, in the event of a BJP loss in the state, another sell-off was expected, as seen in the preceding two years. Stock markets again witnessed a roller coaster ride on 18 December, the day the Gujarat election results came in. The BSE Sensex witnessed a swing of 1,200 points in earlier trade and finally settled trade with half a percent gains on 18th December (Monday) after elections results indicated that BJP will form its government in Gujarat as well as Himachal Pradesh. Positive country-wide cues also supported sentiment. The 30-share BSE index fell 867 points in the opening as early voting counts suggested that the BJP and the Congress were in a close race to win Gujarat, but as the vote counts moved in favor of BJP it recovered immediately to rally 339 points intraday. The rally has since continued, and the Sensex has scaled an all-time high.

The year 2017 has witnessed the high-profile IPO by the leading stock exchange BSE.

Thanks to the growth momentum as well as an increase in mobilization from IPOs, this year we saw many new life insurance companies—SBI Life, HDFC Life, and New India Assurance Company—tapping the equity market via initial public offering (IPO) for a proportion of their shares. Each of these listings was over-subscribed, indicating the perceived long-term prospects for the industry in general, and these companies in particular.

Besides this, many stocks such as Brigade Enterprises, Kolte-Patil Developers, Indiabulls Real Estate, Godrej Properties, and DLF among frontline realty stocks have grown to be multi-baggers and rallied up so far in CY17.

Key events which shaped the markets in 2017

Brigade Enterprises Limited

 

Key events which shaped the markets in 2017

Kolte Patil Developers Ltd

2 thoughts on “Key events which shaped the Indian stock market in 2017

  1. For India, higher crude prices will mean higher imported inflation, because of India imports ~80% of her daily oil requirements. It also means a higher trade deficit and CAD; both of which can put (and are already putting pressure on the INR). Normally, CAD beyond 3% also has an impact on the ratings of Indian paper. Thanks for sharing a great article.

Leave a Reply

Your email address will not be published. Required fields are marked *