Domestic stock markets on Friday closed 2021 with key indices gaining about 0.8 per cent on the back of strong retail and domestic institutional buying. With this rally, the Sensex has gained 22 per cent, or 10,502 points, during the year, posting the fourth consecutive annual rally.
On Friday, the Sensex shot up 460 points at 58,253.82 while the NSE Nifty Index rose 150 points to 17,354.05. Experts expressed cautious optimism about the market’s performance in 2022 even though the horizon is cluttered with many uncertainties.
While foreign investors pulled out over Rs 92,000 crore from the stock market in 2021, domestic institutions pumped close to Rs 94,000 in stocks during the year, preventing a crash in the markets. The Sensex has lost 3,991 points from the 52-week high of 62,245.43 registered on October 19, 2021 on sustained selling by foreign investors.
“2021 saw strong recovery amid continuing challenges from subsequent variants and ended positive today,” said Vinod Nair, head of research, Geojit Financial Services.
The Nifty rose 24.19 per cent in 2021 and it is up 130 per cent from March 2020 lows of 7,500. India outperformed most global peers supported by robust retail participation, economic recovery, vaccine coverage and rising appetite for Indian goods and services.
Despite lingering fears surrounding surging Omicron cases, the domestic market is expected to maintain its resilience. The main risks for the market are the possibility of reversal in interest rate cycle globally amid inflationary pressures and geopolitical risks.
Oil prices fell on Friday but were set to post their biggest annual gains since at least 2016, as per a Reuters report. “In near term, we expect these two opposing factors (liquidity withdrawal on the downside and earnings roll-over on the upside) to remain in play, with markets continuing to consolidate for some more time,” said HemantKanawala, head–equity, Kotak Mahindra Life Insurance Co. Ltd.