The 2020 stock market trends have been an eye-opener for not just India but the entire world. Its massive fluctuations have been a massive headline in such a traumatising phase. The global capitalization of the stock market went over $100 trillion in the year and the GDP ratio observed an all-time-high of 115%. Although, the roller coaster ride didn’t end over here. The Nifty observed a fall of 4600 levels from 12,200 levels.
The Indian economy has hit hard due to covid-19 and it was predicted that the impact would sustain for long. However, recovery was one of the surprising turns of events. The Nifty rose from 7610 levels to 14000 levels making it the peak of 2020. Considering the low in March, there was a rise of 85%. Take a look at some of the important trends and insights into the Indian stock market in 2020.
1. The Inflow of Foreign Investments
The foreign portfolio investment in 2020 has overlooked all the risks. The investment of FPIs in Indian equity has accounted for Rs 167, 523 crores. 85% of this amount came as cumulative flows in October, November and December.
However, March has been a torment for the FPIs. The outflow came to be Rs 122, 000 crores considering the debts along with the equity withdrawals. Though, since then FPIs have become volatile net buyers. Considering the low of March 2020, the inflows since April from FPIs cumulative investment have accounted up to Rs 225, 000 crore. Curiously, FPIs have acted as the sellers in the context of debts as well. However, the DFIs had also played the role of sellers in equity.
The last quarter of the year came out to be extremely significant for the FPIs. The central banks around the world have injected $8.5 trillion and $11.5 trillion as monetary and fiscal stimulus. Despite adding an extensive flow of funds, the foreign investors are now at risk as to the trump era and the BREXIT events have only levelled up the risks.
2. The Stocks Experienced A Spread Than A Limited Rally
Considering the breadth of the stock market factors including Advance and Decline ratios, high/low ratios and upper/lower circuit ratios, once could truly rely on BSE data. The market shows healthy growth when the A/D ratio is between 1 and 2. In 2020, the A/D ratio has increased in certain events and has also stepped down to 0.5. Although, if the average is considered, it was healthy after March.
The circuit ratio is the ratio that determines the ratio of shares reaching the upper circuit to a lower one. When this ratio goes higher, it indicates a risky build-up. March observed this scenario, after which it went to extreme unwinding. The high/low ratio is the ratio of stock touching the maximum high in 52 weeks and the maximum low in 52 weeks. In November 2020, this ratio has drifted to a steep high, which reflects that the rally is immensely broad-based. Also, it defines the market position in an uncharted region.
3.The Closure of Share Market in 2020
BSE Sensex and Nifty 50 on the last day of the 2020 calendar year observed a flat curve in the domestic equity market. The closing of the BSE Sensex came to 47, 751 and the Nifty 50 index closed at 13, 981.75 with an aggressive session. Leading gainers on the Sensex include Housing Development Finance Corporation (HDFC), Sun Pharma, Infosys, ICICI Bank and more.
Keeping a check on stock market trends and insights is significant to stay connected with the market fluctuations having the potential to decide your profits and losses. Indian market shows tremendous opportunity and strength to bounce back from the Covid-19 pandemic and gain a leading position in the top charts.