The market capitalisation of Indian listed companies has risen by over Rs 100 lakh crore in this period as money printing by global central banks, strong rebound in corporate earnings and a flood of retail investors aided risk sentiment.
“Since the lows in March 2020, we have had a relentless bull rally. Often in such rallies, the higher risk you take, the higher returns you make,” Sami Vartak, founder and chief investment officer at SageOne Investment Managers, said in his recent memo.
The journey from 7,511 points to 17,585 points for the benchmark Nifty50 has been parabolic with no instances of more than a 10 per cent fall. For 17 months, the Indian stock market has kept on giving gifts to investors.
As the bull market enters its 18th month, we took a look back at the staggering number that typifies this once-in-a-generation bull market in Indian equities.
The Pandemic Winners
The one takeaway from the above chart is that making money over the past 18 months has been easy, too easy at times. Over 1,650 stocks doubled the money for investors since March 23, 2020 out of the 2,370 BSE-listed stocks for whom data was available on AceEquity. More than 80 per cent of the listed universe outperformed Nifty50 and BSE Sensex, which themselves more than doubled in that time.
The Big Winner
The beauty of this bull market has been in its bountifulness. The broadbased nature of the gains in the market has meant that from penny stocks to bluechip index stocks, each and every one of them have provided investors with handsome returns. The chart above represents Flomic Global Logistics, which provided 17,981 per cent returns to investors from the depth of the pandemic till current highs.
Pandemic Losers
While the list of gainers in this bull market is long, another way to assess this run is to look at the losers. Less than 6 per cent of the BSE-listed companies lost money for investors. If investors avoided these 132 stocks during this period, they would have made money.
While the above three charts provide a potent picture of the special nature of this bull market, the below chart will give investors hope that there is more to come. With Nifty50 and BSE Sensex trading at record high forward valuations, there is concern among investors that a big crash may be impending.
In August, the earnings-to-bond yield ratio was positive. The rarity of this occurrence has been lost on investors as very few track the metric. Sami Vartak pointed out that during market peaks the earnings yield tends to be at a sharp discount to bond yield, suggesting that investors found stocks less riskier than risk-free government bonds. Given the current premium of earnings yield to bond yields, it suggeststhere is more room for this bull market to run.
“I believe the real fear of a market crash should be when the rate cycle peaks and the downtrend starts. Currently, we seem to be a few years away from it,” Vartak said.
