Indian equity markets are set to post their best performance in a decade in FY21, overcoming massive odds induced by business disruptions owing to coronavirus lockdown and its impact on the economy. After ending 26 percent lower in FY20, the benchmarks made an unprecedented comeback in FY21.

Share Market Live

NSE

Nifty has gained over 71 percent in FY21 so far, while Sensex has rallied over 68 percent during the period. FY21 has been the best year for the Indian markets since the financial year 2009-10 when Nifty rose nearly 74 percent. Since then, the benchmark has seen a maximum YoY gain of 26 percent in FY15.

However, one must note that the loss in benchmarks in FY20 was mainly on account of the crash in equity markets in March 2020 after the Centre announced a lockdown to curb the rising COVID-19 infections, shutting down the economy.

Going ahead, analysts expect the market rally to continue in the current fiscal led by earnings upgrades, faster-than-anticipated economic revival, global liquidity, and low-interest rates. However, recently markets have witnessed some correction amid rising COVID-19 cases in the country despite the massive vaccination drive.

"As FY21—a painful disaster for humanity but, paradoxically, beneficial for global stock markets—come to a close, there is hope and optimism in the air. Even though Covid cases are rising in many areas, it is clear that in the race between the vaccine & the pandemic, the vaccine would win. Economies would rebound smartly in FY 22. But markets have already discounted this and valuations are high. But this is unlikely to deter the bulls in the short run," said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The financial year has seen very few losers as stocks rallied sharply from the lows of March 2020. On the Nifty50 index, only 1 stock—Coal India, has given negative returns while the remaining 49 are in the green for the period.

The top gainer in the Nifty50 for FY21 was Tata Motors, up 350 percent followed by Hindalco, JSW Steel, Tata Steel, and Grasim, which were up over 200 percent each. Another 11 stocks including M&M, IndusInd Bank, HCL Tech, Bajaj Finance, Infosys, Wipro, UPL among others rallied over 100 percent each in this period.

Moreover, the rally in FY21 has also been more broad-based and not just restricted to few big names. After underperforming for two years, broader markets not only participated in the rally but even outperformed the benchmarks.

The Nifty Midcap and Nifty Smallcap surged by 106 percent and 131 percent, respectively during the course of the financial year, while the NSE500 jumped 83 percent.

(Edited by : Ajay Vaishnav)