In 2014, the BSE benchmark Sensex rose 30 per cent over the previous year to post its best show since the post-Lehman relief rally of 2009. The investors who had a greater risk appetite and placed their bets on the mid-caps made even more money. The top two stocks - TVS Motor and Eicher Motors - tripled in value.
In contrast, other competing asset classes - gold, commodity and real estate - gave negative returns. So, retail investors were drawn back to the stock market. That should be good news for existing investors, as a greater retail participation would lessen the blow if foreign institutional investors were to sell in the event of global shocks.
The rally this year was led by rate-sensitive and cyclical stocks, such as those of banking, capital goods, automobile & auto ancillary companies. The defensives - shares of information technology, pharmaceutical and fast-moving consumer goods companies - played only a minor part, unlike the previous three years. This broadened the rally and gave it multiple feet to stand on. (Click here for graphics)