2022 in Review: It was a year of consolidation for equity markets; 10 highlights from the year

Pranati Deva
Updated: 27 Dec 2022, 08:21 AM IST
TL;DR.

After rising 21 percent in 2021, Indian markets consolidated most of its gains in the current calendar year, rising only around 5 percent in 2022. The Russia-Ukraine war, rising inflation, high-interest rate, global growth concerns as well as fears regarding recession kept markets on their toes during 2022. However, the Indian equities performed better than most global peers, which gave up most of the gains made during the year 2021. Let's take a look at some key highlights from the year:

While the benchmarks Nifty50 and Sensex are ending the year over 4 percent higher; broader markets underperformed benchmarks with the Nifty Midcap index up 3 percent and Nifty Smallcap index down 14 percent.

Overall, the market breadth has been marginally negative; and volumes below average. Trading volume on the Nifty 50 was at 187,594,000, when markets closed, the lowest ever on record, Reuters reported, citing Refinitiv data. 

Nifty has now given positive returns in 9 out of the previous 10 years; with 2022 being the seventh consecutive year of positive return.

2022 was an extremely volatile year; In the 12 months of the year, Nifty gave positive returns in 5 months and negative in the remaining 5. July 2022 was the best month of the year for markets. In July Nifty gained 8.7%; the aggregate return for the rest of 11 months is -3.7%. After July, it rose the most in October (5.3%) whereas it fell the most in June (-4.8%) followed by in September (-3.7 percent).

Nifty averaged around 17,240 in 2022 YTD, 8% higher than the average of previous year, implying much better returns for the SIP investors. 

For long term buy and hold investors, five year rolling CAGR in 2022 is 11.6%, which is close to 2016-2022 average. Five year absolute Nifty return in 2022 is ~73%, also close to 2016-2022 average.

Smallcap stocks underperformed the benchmark Nifty for YTD2022; however on a 3yr basis, midcap and smallcap are still outperforming the benchmark materially. The newly introduced category of Multicap funds is the best performer YTD2022; while on 3, 5 and 10 yr basis smallcap funds are outperforming.

Presently, technically Nifty is placed in neutral territory, close to 50 EDMA with RSI close to comfortable 44 and short-term momentum indicators in the buy zone.

Foreign investors have been net sellers in the Indian equities (secondary market) to the tune of ₹1.46 trillion; while the domestic institutions were net buyers of ₹2.63 trillion; resulting in a net positive institutional flow of ₹1.17 trillion during YTD2022. 

Sector-wise, PSU banks (+71%) were clear leaders, outperforming all other sectors by a large margin. Consumers, Auto, Energy and Metals were other notable outperformers. IT Services, Pharma and Realty were the only sectors in the red in 2022 YTD.

First Published: 27 Dec 2022, 08:21 AM IST