2024-01-12 05:41:31 ET
Indian stocks have started 2024 with a bang. The BSE Sensex index surged to a record high of INR 72,716 while the blue-chip Nifty 50 jumped to INR 21,922. The Nifty index has soared by over 30% from its lowest point in 2023 while the Sensex has spiked by 27.28%.
Indian stocks have jumped in the past few years, helped by the strong performance of the country’s economy. Economists believe that India grew by more than 7.3% in 2023 and that the growth will continue this year.
The Reserve Bank of India (RBI) has also maintained interest rates unchanged in the past few meetings and analysts believe that it will start to ease this year. In most cases, Indian stocks do well when the RBI is in a dovish mood.
At the same time, there are signs of rotation from Chinese companies to Indian ones as relations with the West wanes. While Indian indices have rallied, the Hang Seng index, China A50, and Shanghai indices have retreated in the past few years.
Nifty 50 vs Sensex index
Top BSE index performers
The Sensex index performance is different from that of the S&P 500 and Nasdaq 100 indices. That’s because, in the US, these indices have been powered by the so-called Magnificent 7, which includes companies like Meta Platforms, Apple, Nvidia, and Microsoft.
In India, however, most stocks have been in an uptrend. Only one company in the BSE index has been in the red in the past 12 months.
The best-performing BSE Sensex index in the past 12 months is NTPC, a leading Indian power generator. Its stock has surged by over 86% in this period as power demand remained at an elevated level.
Larsen & Toubro, a conglomerate that deals with engineering, construction, manufacturing, and IT, among others, has also done well. Its stock has jumped by more than 65% in the past 12 months
The other top performers in the Sensex have been companies like Titan, Power Grid Corporation, LTIMindtree, HCL Tech, and ITC. In addition, companies like Bharti Airtel, IndusIndia, Nestle India, and Bajaj Finance have all risen by over 30%.
Many Sensex constituents have also risen in 2024. The best performers in this period are the likes of Reliance Industries, Sun Pharmaceuticals, Bajaj Finance, and Infosys. Infosys stock price jumped after publishing strong financial results.
India stocks total return
While the Nifty 50 and BSE Sensex indices have done well in the past 12 months, the total return has been relatively lower. I calculate the total return by excluding inflation and the currency rate depreciation or appreciation.
In India’s case, the two indices have risen by about 30% in the past 12 months. In the same period, India’s inflation rate stands at about 6%. This means that excluding inflation, the two indices have risen by about 24%. In real terms, the return is actually lower than that since the official inflation figure is usually not all that accurate.At the same time, the Indian rupee has depreciated against the US dollar. It started 2022 trading at 80.90 and is now trading at 82.87, a 2.4% increase. Therefore, this means that the real return is about 21%.
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