Would you bet on PSU stocks? Nifty adds whopping ₹82 lakh crore to investors

The Nifty 50 concluded 2023 with a remarkable 20% gain, marking its eighth consecutive year of positive returns. This consistent performance has been ongoing since 2015, with the exception of 2015 being the sole year with negative returns since 2012. The recent surge has resulted in a substantial increase of ₹82 lakh crore in investor wealth.

The market capitalization of BSE-listed companies closed the year at ₹364 lakh crore, a significant rise from the approximately ₹282 lakh crore at the beginning of the year. Notably, December alone witnessed an addition of nearly ₹30 lakh crore in market capitalization.

Tata Motors emerged as a standout performer, becoming the first Nifty constituent to double in value in the year, achieving this feat on the final trading day. Other top gainers included Tata Motors, Bajaj Auto, NTPC, L&T, and Coal India.

NTPC and Coal India capitalized on the PSU-themed rally throughout the year, achieving their best-ever calendar year performance. Of the 50 Nifty constituents, 48 ended the year with gains, with only UPL (down 18%) and Adani Enterprises (down 26%) experiencing negative returns.

While the Nifty 50 gained 20% in 2023, the broader markets stole the spotlight. The Nifty Midcap index surged by 46.5%, marking its best year since 2017, while the Nifty Smallcap index recorded a 55% rise, also achieving its best performance since 2017. A total of 93 Midcap stocks and 86 Smallcap stocks closed the year with gains.

Despite foreign investors selling ₹14,653 crore in the cash market during the year, the markets remained resilient, thanks to robust domestic investor participation. SIP flows continued to reach new highs, with domestic investors injecting nearly ₹1.7 lakh crore into the market.

The standout performers of 2023 were the PSU stocks, with the index of state-run companies gaining an impressive 81%, marking its best calendar year performance since 2007. All 20 constituents on the index delivered positive returns, and four stocks saw gains exceeding 100%.

Looking ahead to 2024, caution is advised by market analyst Rohit Srivastava of Indiacharts, who noted an inter-market divergence, with the broader markets not keeping pace with the benchmark indices in making new highs. Srivastava highlighted the significance of January seasonality in potentially providing the market with a breather. Historically, seven out of the last 10 January months have yielded negative returns for the Nifty, while six out of the last 10 February months have delivered negative returns.