Despite several challenges including the liquidity crisis in the domestic non-banking financial companies (NBFCs), global trade tensions and high international crude oil prices, the Indian equities market emerged as one of the best performers globally in 2018-19. The BSE Sensex rose nearly 17 per cent during in the financial year 2018-19, while the National Stock Exchange's Nifty50 increased 15 per cent. That marked the highest growth in any fiscal year since FY2009-10 for both the indexes.
According to analysts, the domestic equity benchmark indexes outperformed major global peers during the period.
"The Indian indices -- S&P BSE Sensex and NSE Nifty50 -- both have outperformed major world indices in 2018-19," Deepak Jasani, retail research head at HDFC Securities, told news agency IANS.
However, the gains were capped as crude oil prices rose and fears grew over a tariff war-induced global slowdown.
On March 29, the last trading day of FY 2018-19, Sensex rose 127 points to close at 38,672.91 and the Nifty50 settled at 11,623.90, up 53.90 points from the previous close.
On a sectoral basis, the banking, energy and IT sectors outperformed with a growth of 25 per cent followed by FMCG at 16 per cent and pharma at 12 per cent. The laggards were led by media, auto and telecom sectors, which declined 24 per cent, 23 per cent and 22 per cent respectively.
"Despite a volatile year due to US-China trade tensions, liquidity crisis and NBFCs, India-Pakistan border tension, the Nifty50 rallied by 14.9 per cent and BSE Sensex was higher by 16.9 per cent in FY19," said Shivendra Foujdar, founder and managing partner, Avighna Trades.
The year was marked by several issues starting from high crude oil prices, the rupee faltering to new record lows against the dollar, the liquidity crisis in the non-banking financial companies (NBFC), US-China trade tensions and the delay in Brexit breakthrough, among others.
Amar Pandit, founder of HappynessFactory.in, a wealth-tech platform, said that the market witnessed a correction in September-October after the NBFC crisis came to light as IL&FS defaulted in September.
He noted that recapitalisation of state-run banks which were under stress was a major boost for the markets.
Along with recapitalisation of public sector banks, eventual easing of liquidity concerns, and a sustained rise in foreign fund inflows also supported the market, according to analysts.
Expectations of the incumbent government coming back to power further boosted the investor sentiments.
Increase in interest rates globally, however, was major concern for the Indian market cited Mustafa Nadeem of Epic Research.
"The important factor that changed the overall scenario in FY19 was the rising interest rates in global markets specifically that by the Federal Reserve," he said.
"Hence the liquidity that was there available easily was being sucked out and capital outflow was seen. So it was a year more of consolidation."
The inflow of domestic funds however made up for it, analysts said.
Mr Foujdar said: "Even when Nifty was seen losing the benchmark of 10,000 points, the DIIs flow kept supporting the market making Bank Nifty and IT rose close to 25 per cent during the just concluded fiscal."
Bajaj Finance, Reliance Industries and Axis Bank were the top gainers with advances of 71 per cent, 54 per cent and 52 per cent in FY2018-19. On the other hand, Tata Motors, Vedanta and Indiabulls Housing Finance fell the most, registering declines of 47 per cent, 33 per cent and 31 per cent respectively.
The Nifty50 and the Sensex even fared better than major global indices Nasdaq (9.53 per cent) and S&P 500 (7.33 per cent), according to analysts.
Analysts and experts are of the opinion that the markets are likely to continue the upward momentum in the next few months.
According to Vinod Nair, head of research, Geojit Financial Services: "The NPA (non-performing assets) problem has reduced from 11.5 per cent in March 2018 to 10.8 per cent in September 2018, which is further expected to decline to 10.3 per cent in March 2019."
"This process is ongoing and will provide a real effect on the humongous size of stuck project in India, which will result in a restart of private spending in the coming years. In a nutshell, the domestic economy is likely to improve in FY20 compared to the FY19."