A we approach the end of FY21, markets can certainly look back with satisfaction that 1indices gained over 65% during this period. Here is a quick take on 21 significant defining points of fiscal year 2020-21.
1. Sensex and Nifty may have bottomed in March 2020, but the rally in FY21 was beyond all expectations. Both indices rallied over 65% as Sensex scaled past 50,000 and Nifty past 15,000. World markets lost $25 trillion in market cap in Jan-Mar 2020 but recovered all the loses and more.
2. As work offices and classrooms shifted to homes, Zoom and a host of similar names prospered. Managing logistics was another example, best exemplified by ITC tying up with Dominoes to home-deliver Ashirwad Atta.
3. Among learning portals, India’s home grown Byju’s touched valuations of $15 billion, just a tad below Paytm. Even as Byju’s expanded inorganically, it triggered more learning models like Vedantu, Unacademy etc.
4. The US Fed announced an overall stimulus of $5 trillion, as Europe, UK and Japan chipped in with another $5 trillion stimulus. India infused $350 billion including 125 bps rate cuts, but the net result was an across-the-board bull market in risky assets.
5. In a move which could have long term repercussions, banks offered a 6 month moratorium and a 1 year freeze on NPA recognition. That led to gross banking NPAs falling below Rs.600,000 crore but the real picture will only be clear in next fiscal.
6. GDP contracted -23.5% in Jun-20 and -7.5% in Sep-20 quarter. Despite GDP growing flat in Dec-20, India is expected to close the fiscal year with around -7% GDP contraction; the first such instance since 1979.
7. Templeton MF shut down 6 debt schemes due to illiquidity resulting in nearly Rs26,000cr locked up. SBI MF has been appointed to start customer pay-outs and the process has just begun.
8. Gold touched a peak of $2075/oz in Aug-20 even as WTI Crude dipped into negative zone towards end of Apr-20 on storage shortfalls. Gold lost its safe haven appeal post August but Brent Crude continues to be volatile at close to $62/bbl.
9. The year saw a sharp spike in US benchmark 10-year bond yields tripling from 0.512% in Aug-20 to 1.758% in Mar-21. This expressed apprehensions of a Fed rate hike and sent emerging markets into a tailspin.
10. On corporate funding, the year belonged to Reliance. It raised $35 billion by monetizing stakes in Jio Platforms and Reliance Retail apart from a $7 billion rights. It helped Reliance become zero net-debt.
11. Tatas heaved a sigh of relief as the Supreme Court dismissed all charges made by the Mistry family; including oppression of minority shareholders. The action will now shift to valuation of Mistry stake in Tata Sons and a planned exit.
12. The merger between Reliance and Future group was held up after Amazon objected to not being given first right of refusal. Amazon holds 49% stake in Future Coupons. The legal case is still on.
13. Vedanta tried to delist at Rs87.50 but LIC blocked the idea. Now Vedanta is back with an offer of Rs235 per share. The moral of the story is that small shareholders gain when marquee institutional investors like LIC put their foot down.
14. Chinese intrusions in the Galwan Valley near Ladakh border led to India banning hundreds of Chinese apps on security grounds. Meanwhile, India is also planning to put curbs on Chinese participation in 5G in India.
15. Despite his best efforts, Donald Trump could not manage a second term as the US voted decisively in favour of Joe Biden. Global markets cheered this shift hoping for smoother world trade and less frictions with China.
16. Covishield manufactured by Serum Institute, on behalf of Astra Zeneca and Oxford Research, got approval in India as did Covaxin of Bharat Biotech. However, inoculations are yet to gather scale.
17. Fiscal deficit spillage was expected but what the FM announced was steeper than expected. Fiscal deficit was pegged at 9.5% of GDP for FY21 and at 6.8% for FY22; well above the FRBM targets.
18. It was a stellar year for capital markets. Apart from the Sensex rally, India saw record number of demat and trading accounts opened, IPOs had the best year in collections since 2017 and FPIs infused a record Rs202,000cr into Indian equities in FY21.
19. In a brave move, the FOMC and RBI hinted at low rates and accommodative stance for next 3 years till growth actually bounced back. However, looking at the spike in bond yields, it does look like the markets are still sceptical.
20. Farm Bill 2020 became a bone of contention in a year when Kharif output touched a record 145 MT. Lakhs of farmers went on a total strike protesting against the Farm Bills. This could impact the Kharif cropping season this year.
21. Towards the end of the fiscal year, in a freak incident, a 400-meter liner was grounded in the Suez Canal. While the liner has been towed out after a week, the canal congestion may take more than a week to clear and the secondary impact may last for months.
If FY21 began in the midst of an economic slowdown, there are reasons to cheer by the end and hope that FY22, should be a lot better.