After the global meltdown in 2008, the year 2009 was one of recovery – instilling hope amongst equity investors. The Indian equity markets witnessed a sharp upward rally from the lows that were witnessed in March 2009. Positive economic data from the Western world, improving consumer confidence, increasing industrial production, and rising domestic consumption are some of the factors that have lent strength to the equity markets. This article analyzes how the Indian equity markets performed in 2009.

After a rapid downfall in 2008, the Indian capital markets performed very well in 2009. After starting off in a whimper on the back of weak global cues and the Satyam fiasco, the Sensex, in 2009, surprised investors by gaining 80% over the previous year, Actually, the bellwether index doubled itself towards the end of the year from its March bottom level of 8160. The gravity-defying move by the equity markets was largely driven by improving economic conditions and ample liquidity available in the system. At the dawn of the New Year, a sense of excitement, mixed with apprehensions, prevailed in the air. Will the good run of the sensex continue in 2010? Actually, in 2009, all sectors did not participate in the upward rally of the stock market. Hence, the performance in 2010 will depend on the sector wise performance in 2009. This article presents the performance of various sectors in 2009 and the macro elements which the investors have to observe in the current year to make their investment decisions.

Broadly, the major sectors involved in stock market activity are: auto, banking, capital goods, consumer durables, FMCG, healthcare, information technology, metal, oil and gas, power and realty stocks. The BSE maintains sectoral indices for these segments. The performance of the equity market is explained with the help of these sectoral indices. The BSE sensitive index (30 Scrips) (Sensex) increased from 9,903.46 points on 1-1-2009 to 17,464.81 on 31-12-2009. This means that the Sensex increased by 76.35% during 2009. The lower limit of sensex during 2009 was 8, 047.17 (recorded on March 6, 2009) and upper limit was 17,464.81 points (recorded on the last trading day of 2009). The average monthly returns from the Sensex was 5.49% and the monthly compounded returns was 5.07% during the year. FMCG sector was the worst performer and the metals sector was the best performer during this period. While the FMCG, healthcare, realty, oil and gas and power indices underperformed, the banking, consumer durables, IT, auto and metal indices over performed during 2009, compared to the Sensex.

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