As we pull the curtains down on the first half of 2018 calendar year, here is a quick recap of how the market faired, who were the gainers, losers and how did India fair in the global backdrop.The first half of the year has been a positive start with a 180 point rally on the Nifty, but this is the second slowest start we have seen in comparison to the previous five years.
There were a whole host of factors that the Indian market has to battle in this year, namely the introduction of long term capital gains in this year's budget, which was followed with PNB Nirav Modi saga.Remember, the foreign institutional investor's (FII) have been selling in the Indian market and in H1CT18, they have sold near $4 billion, which is a stark contrast to H1CY17, when the FII’s pumped in more than $3 billion and matched the domestic institutional investors (DII), who also pumped in $3 billion in H1CY2017.
In H1CY18, the DII’s outdo themselves as they pumped in $9 billion to combat the FII selling.
The mood in the broader markets have been further dented with the implementation of additional surveillance measures by stock exchanges and also the recent spate of auditors resigning from select group of companies.
Matters got more complicated on the macros front as Brent crude prices rallied by more than 15% in 2018, hurted our fiscal deficit numbers and also the rupee hit the lowest level we have seen in June 2018.Besides the domestic factors, the global headwinds have hurt the bulls with a hawkish Federal Reserve hiking rates and US President Trump’s trade tariff tantrums further compounding matters.
Comparing the performance of the Indian market with other emerging markets, shows a relative outperformance in local currency.
Now, from an FII point of view, we need to track the emerging market performance in dollar terms and indicates emerging markets currencies have seen a sharp depreciation against the dollar, thus compounding losses for FII’s in dollar terms.India, however has done a relative outperformance in local currency and also in dollar terms.
Now, despite the fact that the Nifty is in the green for H1CY 2018, the total market capitalisation lost on BSE listed companies is approximately Rs 6.5 lakh crore, indicating a sharp underperformance from the broader markets and pain seen in various portfolios.
Rupee has depreciated approximately seven percent in 2018 so far, and that bodes well for information technology companies but Wipro though has been a relative underperformer. Midcap IT also does well in the bull run.
Besides the information technology names, the bluest of blue chips like Kotak Mahindra Bank, Bajaj Finance and Hindustan Unilever Ltd (HUL) have also put a good show in H1CY2018.
However, from the Nifty, there have been sharp underperformers.
The real pain though has been seen in the broader markets with some stocks losing 50% of its market capitalisation.
There have been a few select gainers though from every sector as mentioned below.
Finally, just going by historical evidence, the second half year has seen a relative underperformance against H1 in the past few years, but what H2CY2018 holds for us is anyone's guess?