2017 in review: From GST to North Korea jitters, top 5 market highlights

The year 2017 many highs and a few dampeners for Indian markets. Here is our pick of the top 5

The year 2017 has been a robust one for the Indian markets, with frontline indices S&P BSE Sensex and NSE Nifty50 gaining over 30% each on a year-to-date (YTD) basis.
 
The year also saw the indices clocking fresh milestones, with as the Nifty breaching the 10,500 mark and the Sensex achieving the 34,000 milestone. Despite a few phases of consolidation, the indices performed well throughout the year. The BSE Mid- and Small-cap indices rallied 52% and 64%, respectively, during the year.
 
Be it a recovery from the government’s demonetisation decision to investors giving a thumbs-up, or the goods and services tax (GST) rollout, or military posturing between the US and North Korea, or policies of global central banks, or the outcome of Assembly elections – the markets seem to have overcome all the obstacles to continue their bull run.
 
Here are the top five highlights for the Indian markets in 2017:
 
1. Elections
 
Markets cheered as Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) registered massive victories in state elections this year. Earlier, BJP saw a landslide victory in Uttar Pradesh elections in March, winning a two-thirds majority. The UP election outcome saw the Nifty closing at a lifetime high of 9,087.
 
Though with a less-than-expected number of seats, December saw the BJP retaining power in Gujarat for a sixth straight term, and wresting control of Himachal Pradesh from the Congress party. The political stability gave the markets an extra kick, as investors hoped for more reforms from a stronger Centre.

 
2. GST
 
Investors gave a thumbs-up to the historic Goods and Services Tax (GST) rollout on July 1, with the Sensex and Nifty rising over 1%.
 
The new indirect taxation regime replaced multiple central and state government taxes. Under this, goods and services are taxed at the rates of 0%, 5%, 12 %, 18% and 28%. Following the GST cheer, the Nifty50 hit 10,000, for the first time in its 21-year history, on July 25.

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3. Bank recapitalisation plans
 
The banking sector made quite a buzz in the year 2017, with multiple reforms being rolled out to fix the issue of banks’ rising non-performing assets (NPAs). Finance Minister Arun Jaitley in October announced an unprecedented Rs 2.11-lakh-crore plan to recapitalise public-sector lenders and strengthen them. The plan includes the issuance of recapitalisation bonds worth Rs 1.35 lakh crore. The Sensex and Nifty hit record highs following the announcement of the mega recapitalisation plan.
 
The funding is expected to help strengthen the financials of banks. NPAs of public-sector banks alone had increased to Rs 7.33 lakh crore as of June 2017 from Rs 2.75 lakh crore in March 2015. Besides recapitalisation bonds, the finance minister also announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.

 
4. A year of IPOs
 
The year 2017 has been a bumper one for initial public offerings (IPOs) on Dalal Street, with as many as 167 issues hitting the stock market and raising Rs 68,810 crore so far. This is much more than the cumulative Rs 50,930 crore garnered in the past five calendar years.
 
General Insurance Corporation of India (GIC) topped the IPO chart, garnering over Rs 11,372 crore in the largest public float by any firm since Coal India’s October 2010 offer that raised Rs 15,000 crore.
 
In terms of stock performance, Avenue Supermarts, which operates retail stores under the brand name D-Mart, was the best performer, gaining 90% over its listing price and a whopping 285% over its issue price.

ALSO READ: 117 companies raise Rs 62k cr via IPOs in Apr-Nov FY18, highest in 5 years

 
5. Global cues
 
From US Federal Reserve raising key rates to North Korea’s nuclear tests, the year 2017 saw several global cues affecting the sentiment in the Indian markets as well.
 
As expected, US Federal Reserve stuck to its script of raising interest rates three times in 2017. The central bank also raised its growth forecast for 2018. The year also witnessed a volatiliy in crude oil prices dampening the sentiment.
Another major cue was a rise in tensions on the North Korea front. In September this year, the country reportedly tested a hydrogen bomb, believed to have the capability to strike Japan or US coast. Markets around the world got the jitters, as the US and North Korea continued with their posturing and threats to each other.