Samvat 2076: The Ugly, the Bad and the Good

Just a few days ahead of the start of Samvat 2077, the Nifty and the Sensex have touched life-time highs.

Nov 13, 2020 09:11 IST India Infoline News Service

The Sensex closed with gains of 192 points on October 27, 2019; the first day of Samvat 2076. However, no trader or investor would have imagined that Samvat 2076 would be so tumultuous? In fact, just a few days ahead of the start of Samvat 2077, the Nifty and the Sensex have touched life-time highs. But hidden behind this apparent euphoria and enthusiasm is a Samvat 2076 that was tumultuous and scary; to say the least.

The Ugly, the Bad and the Good

Clint Eastwood may not be too happy with his classic title being tampered but that is what best describes Samvat 2076. Let us look at the ugly aspects of the year first.

What got really ugly were China’s relations with the US and to an extent with India too. Trump persisted with trade sanctions even as China indulged in some sabre rattling on the Indian border. We call it ugly, because it was controllable and hopefully, with a change of guard in the US, there should be thawing of the ice.

The year got bad in more ways than one. The COVID pandemic took more than a million lives with hardly any country being spared. It triggered rampant lockdowns and a virtual halt to economic activity. Millions of workers were rendered jobless and stock markets crashed nearly 40% in a span of few months. To top it all, India’s GDP sank into negative in the Jun-20 quarter, something unfathomable even a year back. Unfortunately, Samvat 2076 is likely to be remembered most prominently for COVID and its after-effects.

Let us infuse a dose of optimism! To be fair, the year had good tidings too. The pandemic lockdown taught Indian companies and households to be more disciplined. That is evident in balance sheets. In the midst of all the tumult, foreign investors continued to repose faith in India and the spate of FII money confirms that. Above all, the government has been proactive and opened its purse strings despite the fiscal challenges.

In retrospect, it is this positive side that most of us should ideallyrecollect when we narrate stories to posterity about the tumult of 2020.

Some sectors moved the markets, but some were unmoved

In every Samvat, there are winners and losers in terms of returns. This year was different because Samvat 2076 returns don’t tell you the full story. Check the table below.

Key Index 27 Oct 2019 11 Nov 2020 Returns (%)
Nifty 50 11,627 12,749 +9.65%
Nifty Mid Cap 4,464 5,049 +13.11%
Bank Nifty 29,516 28,845 -2.27%
Nifty IT 14,956 21,330 +42.62%
Nifty FMCG 31,803 30,846 -3.01%
Nifty Auto 8,102 8,255 +1.89%
Nifty Oil & Gas 5,239 5,040 -3.80%
Nifty Pharma 7,743 11,570 +49.43%
Data Source: NSE

What is special about this table is that it conceals as much as it reveals. Let us first look at what it reveals. Pharma and IT have been the outstanding performers of Samvat 2076. It is not hard to fathom the pharma story. COVID created a race for the vaccine and the first port of call was Indian pharma companies that had the capacity to manufacture volumes.

The second reason was that the conflicting signals from China created a huge market for Indian APIs and that also boosted pharma.IT was a different ball game. Even as Gartner had projected a fall in IT spending last year, COVID changed all that. Individuals and companies had to increasingly rely on IT to work, interact and communicate from remote locations.

Now for the unsaid story! A return of 9.65% on the Nifty may look like any normal Samvat Year. What it does not reveal is that between Nov-19 and Mar-20, the Nifty corrected 35% and from that point recovered 68% to eventually return 9.65%. As much as the correction was nerve wracking, the bounce was equally gratifying.

What applied to the Nifty applied to other indices like the mid caps, autos and banks also? But there was one more trend that emerged from Samvat 2076.

Samvat 2076 narrated a tale of two India’s

Samvat 2076 also highlighted that, more than ever before, Indian economy remains steeped in contradictions.

• At a time when urban India was the focus, the real growth in demand came from rural Indiaduring Samvat 2076

• In the midst of mad work rush hours, Samvat 2076 proved that it was perfectly possible to work productively from home too

• In a year when most companies struggled for funds, Reliance raised $30 billion from investors, almost became debt free and created a $200 billion behemoth

• Billions of dollars flowed out of provident funds but infusion into equity funds, mutual fund AUMs and new demat accounts went on to set records

The biggest takeaway from Samvat 2076 is that behind all the tumult and the torment, there is a robust India story that is still attractive. That givers hope; and should hopefully be a good note to start Samvat 2077.

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