Exactly six months ago, the market was in the midst of a brutal sell-off induced by the onset of the COVID-19 pandemic, having fallen about 35% in March from a late February peak.

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Uncertainty reined when the new financial year started, but with half of the year out, things appear to have panned out well – at least as far as the market is concerned.

Here’s a half yearly check.

Markets H1 performance at a glance

- Strong rally after a 26 percent decline in FY21

- Most stocks near 52W low by end FY20

- Rally led by global markets, liquidity, attractive valuations

- Reliance contributes 800 points to Nifty’s 2600-point rally

If you started a new investment account at the start of FY21 like many retail investors did, you would be proud of having made big returns in a short span of 6 months. For those holding on from pre-pandemic levels, the only solace has only been a swift amelioration from lows.

After a 26 percent decline in FY20 (thanks to the March sell-off), the Nifty and the Sensex rallied 31 percent from levels seen on March 31. This rally was largely global in nature, led by largesse from central banks across the world and big money chased attractive valuations.

Nifty performance through the years:

A large part of the Indian market’s rally was courtesy Reliance, which gained 104 percent in H1FY21, and accounted for nearly 800 points of the Nifty’s 2600-point rally.

Compared to major global indices, India was among the top performers, with Nasdaq being the leader at 44 percent gains. In the European markets, Germany saw a 28 percent gain in the DAX while the British FTSE and the French CAC gained just 5 percent and 9 percent respectively.

In the emerging market pack, Korea saw a 33 percent gain while Brazil witnessed 28 percent gains to the BOVESPA as well. The Shanghai Index saw a 17 percent growth while Hang Seng declined 1 percent in the last 6 months.

Global Indices

Among sectors, auto stocks did well driven by hopes of a strong demand for personal mobility as a result of the pandemic. While demand for personal mobility is a hope for the future, strong tractor sales is a data point at present. Rural themes did well as the spread of COVID was confined to the Metros and Tier 2 towns in the early part. Shares of both M&M and Escorts have nearly doubled in the last 6 months.

Pharma and IT have been called the leaders of this rally and they’ve lived up to the title with 50-60 percent gains in the first half of FY21. While midcaps have outperformed the Nifty in H1 so far, the Nifty Bank has had its back broken on fears of financial problems that the virus is likely to bring to borrowers, small and large. The PSU Bank Index is among the 2 indices that are lower now vs levels seen in March.

Sectoral Indices

While it’s been a rally led by Autos, IT, Pharma and Metals, Reliance has had a massive impact on the recovery. The Oil to Retail giant raised series of funds for Jio and now the retail business and generated over Rs 7.5 lakh crore ($100 billion) in market cap over the last 6 months. Reliance holds 15 percent weight on the Nifty now, versus 10 percent at the start of FY21.

Among the few losers on the Nifty, Coal India tops the list with a 17 percent decline followed by IOC & SBI. Surprising names in the losers list are erstwhile multibaggers: HUL & Bharti Airtel.

Nifty Gainers

Nifty Losers

The mid and small caps have been the flavour of FY21 so far. Coming from the brink of bankruptcy has been Vodafone Idea, with a near 200 percent plus rally from its small base. Pharma stocks like Granules and Glenmark have been the star of the F&O Space. However, even Auropharma, Divis Labs and Apollo Hospitals have nearly doubled in the fiscal so far.

Metal names like JSPL and Vedanta have gained b/w 110-125% while Midcap IT stocks like Tata Elxsi and Hexaware have been 2 baggers as well. PSU Banks have been rank underperformers with bottom 3 performers in the F&O universe being BoB, Union Bank and PNB. Other PSUs like HPCL & PFC too find a mention in the list of losers this year so far.

Midcap Gainers

Midcap Losers

It’s been a (half) year of dramatic returns in many stocks. Over 30 stocks on the NSE have more than tripled in the last 6 months and a handful of them have gained over 5-6X in the first semester of this year. The list of small-cap fireworks is long, but here are the ones that lit the small-cap sky:

Smallcap gainers

As we stand at the halfway mark, the key triggers for H2FY21 will still be the spread of COVID, its concomitant impact on the economy and development of a potential vaccine or cure.

Corporate results and management commentary will be more important than before as Nifty valuations have now reached near all-time high levels at around 22X FY21e and 18X FY22e.

US presidential elections will be the big global event that the world will keep an eye out on in November-December. Biden’s comment on the reversal of Tax Cuts would be an overhang on Wall Street were he to hold the Oval Office this winter.

First Published:Oct 1, 2020 10:33 AM IST