2009 – A Year of Recovery – Quick Performance Recap

After the Global Meltdown in 2008, the worst year for equities, 2009 was a year of recovery instilling hope amongst equity investors. Here is how the Indian Market reacted to National and Global News during the year.

FIIs have already purchased more stock in 2009 than ever before in a single calendar year as overall institutional flows are just short of the 2007 high. Until yesterday, FIIs were the major Buyers in the Indian Cash Market with net purchases of over Rs 16,283 cr while their hedge in the Derivatives is a Negative 4,383 cr. Domestic Equity funds have bought mere Rs 614 cr while Domestic Insurance sector is another big bull in the making has bought stocks worth Rs 6500 cr.

The Indian equity market is finishing 2009 with one of its best three performances in a calendar year and as one the top 4 performing markets in the world. The best sectors were Materials, Consumer Discretionary, and Technology, whereas the worst-performing sectors were Telecoms, Consumer Staples and Utilities. Consumer Staples, Energy, and Telecoms underperformed their respective EM sector indices. Earnings revisions were positive in the second half of 2009 but estimates have just managed to return to where they were at the start of the year.

On the macro front, the interest rate markets were marked by rising long bond yields and record levels on the yield curve. The rupee was largely range bound against most currencies while appreciating modestly versus the USD. This was a big change after the volatility of the previous two years. It was a year of recovery for economic indicators. While industrial growth improved smartly, credit growth remained close to a 15-year low.