India among world's best performing markets in 2018 despite volatility

Indian equity markets were among the few globally best-performing markets in 2018 despite a year of extreme volatility amid domestic and global worries.

The S&P BSE Sensex rose 2,019.89 points or about 6 per cent and the NSE Nifty50 329 points or about 3.2 percent during the year.

Sensex closed at 36,068.33 as against the previous year's close of 34,056.83 points. Nifty50 touched 10,862 points from its 2017 close of 10,530.

Of course, the performance in 2018 was limited compared with the previous year's 7,430 points or 28 percent rise of Sensex to close at 34,056 points. Nifty50 also rose a robust 2,344 points or 29 percent to close at 10,530 points.

Declining inflation and solid industrial growth numbers helped the market bulls throughout the year. However, the year-end technical charts have shed the hooves and sprouted bearish claws, reports suggest.

The markets weathered uncertainties over liquidity arising from a haphazard implementation of the Goods and Services Tax (GST) across the country. The lingering effects of demonetisation also cast their spell on the equities. One of the biggest unsettling factors was elections in five states including three Hindi heartland states. The loss that the ruling Bharatiya Janata Party of Prime Minister Narendra Modi suffered in the elections contributed to the market volatility.

The incessant squabbling between the Reserve Bank of India and Finance Minister Arun Jaitley-led North Block added to bookmakers' worries. The issues persisted until central bank chief Urjit Patel left and the government chose Shaktikanta Das, a former bureaucrat, to succeed him.

The benefits of the low oil prices on the international front failed to fully benefit the Indian markets because of output cut worries triggered by frequent remarks of oil exporting nations. However, the rupee's weakness against the US dollar negated the economic benefits of some long phases of low crude prices.

Global worries

The Indian markets also saw heavy investment flight, especially in the latter half of the year when foreign institutional investors (FII) took their money elsewhere. The strong US economy turned out to be a spoilsport for the Indian markets.

Global worries about the emerging US-China trade war tended to disrupt markets across the world. They had their impact on Indian markets too, according to news reports. The maximum tariffs that US President Donald Trump imposed on imports from China and Chinese President Xi Jinping's retaliatory tariffs roiled the markets. A diplomatic row erupted after Canada arrested Meng Wanzhou, Huawei founder's daughter and a senior company manager, over a US case on violation of Iran trade sanctions. Beijing's retaliation by arresting Canadian citizens pushed up the market tensions in India as in other global markets.

However, in a year when the global indices battled adverse market cues, Indian equities benefited from a good monsoon and sharp manufacturing GDP rise, partly aided by a Chinese slowdown.

Among sectoral indices, the S&P BSE IT index gained the most, rising 26.1 per cent, while the S&P BSE Telecom index fell 39.58 per cent.

The NSE's top five gainers were Bajaj Finance (up 50.12 percent), TCS (44.35), Tech Mahindra (43.65), HUL (34.52) and Infosys (27.16), according to a report.

The report flagged HPCL (down 39.45 per cent), Vedanta (40.07), Bharti Airtel (40.43), Yes Bank (42.12) and Tata Motors (59.19) as the five worst-performing equities.