Indian shares end record-breaking 2023 with a whimper

BENGALURU: India’s benchmark indexes ended 2023 on a sour note on Friday, snapping a five-session rally due to a drop in financial and energy companies, but ended higher for an eighth straight year.

The blue-chip Nifty 50 index closed 0.22% lower at 21,731.40 points, while the S&P BSE Sensex settled 0.23% down at 72,240.26 points – both only slightly shy of the record highs hit in the previous session.

The Nifty has jumped over 20% in 2023 and the Sensex has risen nearly 19% to log their best years since 2021 and second-best since 2017, powered by sustained domestic mutual fund inflows, the return of foreign buying, better-than-expected macroeconomic growth and steady corporate earnings.

That also helped the small- and mid-cap indexes outperform the large-caps with surges of about 56% and 47%, respectively, this year.

Both indexes rose to fresh record highs on Friday. The Nifty and Sensex however, after posting record highs in the past two sessions, were weighed down by a pullback in financials.

Financials drive Indian benchmarks to new record highs

Financial services, banks and private banks fell 0.2% to 0.6%, easing from record highs in the previous session.

Reliance Industries, India’s most valuable company, fell 0.79%, and oil marketing companies also dropped on reports that the government was mulling fuel price cuts. The energy index declined 0.75%.

For next year, HDFC Securities expects gains in the early part of next year, followed by bouts of volatility due to the timing and quantum of interest rate cuts, valuation concerns and the general elections.

Rahul Sharma, head of technical research at investment advisory firm Equity99, says the elections may create uncertainty.

“The outcome and subsequent policies of the new government can influence investor sentiment, leading to fluctuations,” he said.

This year, Tata Motors was the top gainer in the Nifty index, with the stock doubling in value. Adani Enterprises was the worst, dropping 26%, failing to recover from the pounding in January after a critical short-seller report.