Stock market boom, but relatively low returns in first half

AHMEDABAD: During the first half of the calendar year 2023, despite the boom in the equity markets, the returns received from the market remained low. The Sensex returned 5.1 percent, while the Nifty returned 4.8 percent in the same period. However, the Nifty Midcap 100 and Nifty Smallcap 100 indices rose 12.7 percent and 10.9 percent respectively.

Foreign portfolio investors were net sellers during the first half as capital flows shifted from India to China due to normalization in China. In the first two months of 2023, foreign portfolio investors received Rs. 35,229 crore worth of shares were sold, due to which the markets fell by about 10 percent.

The Hindenburg Research report raised concerns among investors. In addition, uncertainty surrounding central bank policies amid a banking crisis in the developed world and persistently high inflation weighed on sentiment earlier in the year.

During the first quarter of 2023, Indian stock markets fell by around 4 percent and were among the worst performers. China's stock markets rose nearly 6 percent. However, during the second quarter domestic equities saw a major turnaround as FPIs invested heavily in India. This changed India's performance.

On the other hand, positive sentiments have been replaced by positive quarterly data and strong macroeconomic data, easing of inflation and some other issues. During the first half of the year, foreign portfolio investors as well as mutual funds contributed Rs. Purchased more than 62,000 crores.

The first half of calendar year 2023 was particularly good for US and Japanese stocks. The technology-focused Nasdaq rose nearly 30 percent, while the S&P 500 gained 14 percent. In addition, the stock markets of Taiwan and South Korea also rose by 20 percent and 15 percent as the new age equity theme gained global popularity. Japanese markets also managed to outperform, with the Nikkei 225 rising 27 percent to its highest level in nearly 33 years.