Date:04/04/2004 URL: http://www.thehindubusinessline.com/2004/04/04/stories/2004040401770100.htm

Back Stocks set a scorching pace

B. Krishnakumar

"Bliss was it in that dawn to be alive

But to be young was very heaven"

Wordsworth

INVESTORS in Indian equity markets may share those sentiments fully for India was the place to be in 2003-04.

The Indian equity markets outperformed most of the other major global markets in this period. More than 900 stocks registered a 100 per cent plus gain in value during the year, higher than what the benchmark indices — Sensex and the Nifty - registered in that period.

The Sensex registered 82 per cent rise last fiscal and the Nifty posted an 80 per cent gain.

In comparison, the 28 per cent increase in the Dow Jones Industrial Average and 31 per cent rise in the S&P 500 index appear relatively modest.

The Nikkei 225 index and the Hang Seng index posted 47 per cent gains during this period.

A closer look at the profile of major gainers indicates the kind of fancy the mid-cap stocks enjoyed during 2003-04. The list of top gainers is populated by mid-cap companies such as Balkrishna Industries, Jubilant Organosys, Elgi Equipment, Mercator Lines and KEC International.

These companies have recorded gains in excess of 700 per cent during 2003-04. The buoyancy in the mid-cap stocks is reflected in the 137 per cent rise in the CNX Midcap 200 index.

The upward spiral in share price of these companies has dwarfed the fairly healthy returns posted by large cap stocks such as Tata Motors, Reliance Energy, Sterlite Industries and Bharti Televentures.

Tata Motors posted an impressive 206 per cent increase. While most of the fundamentally sound companies have managed to record higher levels during 2003-04, quite a few small cap companies with relatively shaky fundamentals have been relegated to the losers list.

The fiscal ended March 2004 would be remembered as a landmark year in the Indian stock market history.

Factors such as boom in the automobile sector, improved economic growth, plentiful rains, pick-up in industrial activity and record fund inflows from the foreign institutional investors were the key factors that propelled the equity market into a bull orbit.

The firm trend in price of key commodities along with depreciation of the US dollar against key global currencies including the Indian rupee also helped the cause.