StatsGuru: 31-December-2012

The last StatsGuru of 2012 examines how the stock markets have done this year. Which shares were big gainers and which big losers? As Tables 1 and 2 show, many of the gainers were in cement and infrastructure, showing even that moderately-performing sectors can have standout players. Many of the losers in Table 1 suffered from lack of confidence in their promoters, perhaps because of share pledging.

Sectorally, banking did best in a year in which new laws were finally passed, as Table 3 shows. Fast-moving consumer goods, a defensive sector, did well too; realty performed on a low base. The energy sectors did relatively poorly, but only IT actually lost value over the year. What caused the market to move radically in 2012? Fittingly given the predominance of FIIs this year, it would fall, such as on March 22 or May 8, because of concerns over the rupee and Europe; it gained, such as on June 29, when GAAR was postponed. Table 4 shows local issues mattered too, of course: on June 29, the Reserve Bank of India hints that rate cuts were imminent caused big gains, and the government’s reform proposals in mid-September led to the biggest single-day gain in 2012 – combined with the US Federal Reserve’s quantitative easing, of course.

What of overall P/E ratios? As Table 5 reveals, Indian shares have an overall P/E ratio lower than most Pacific Rim countries, such as Japan, Korea or Taiwan, but significantly higher than the West’s. China’s markets, which took a beating this year, have a lower P/E ratio than India’s. Table 6 tracks the Sensex and the markets’ P/E ratio since 2007; the index is creeping up to pre-crisis heights, but expectations as measured by the P/E ratio are still muted.(Click here for tables)