The Indian market has had a healthy year, returning over 25 percent between Sensex and the Nifty on a year to date basis.
The year also saw the indices clocking fresh milestones, as the Nifty reached 10,000-mark in the month of July. Despite a few consolidation phases, the index has largely traded above that mark, while the Sensex also traded above 33800-mark.
Among several aspects which affected the markets this year were GST, IBC and bank recap programme, IPO frenzy, rate hikes by the US Federal Reserve along with Donald Trump becoming the new President of United States.
Moneycontrol lists at 10 major things that shaped the markets during 2017.
Finance sector was one of the big newsmakers of this year as multiple reforms were rolled out to fix the issue of rising NPAs along with address their cash flow needs.
A massive Rs 2.11 lakh crore recapitalisation plan for public sector banks was laid out by the government in October 2017. The plan is spread over two years. The Centre will infuse Rs 1.35 lakh crore through recapitalisation bonds and Rs 76,000 crore through budgetary support and market raising.
The government also brought in an amendment to the Insolvency and Bankruptcy Code ordinance in November 2017 with an aim to prevent misuse of the facility. The change prevents wilful defaulters or promoters with some history of defaulters from bidding for their own or other stressed assets at a discount.
A year of IPOs
The year 2017 could well be called the year of IPOs (initial public offerings). According to a latest Motilal Oswal report, over 120 companies hit the primary market and have raised Rs 70,000 crore so far, much higher than Rs 42,500 crore raised in FY08 and that of Rs 29,100 crore in FY17.
The year also saw one of the most sought after IPO witnessing a bumper listing premium of 100 percent. Avenue Supermarts, the operator of D-Mart, doubled investors’ wealth in the opening tick and has seen an upward move since.
3 Fed rate hikes in 2017
Emerging markets like India could take relief in the fact that US Federal Reserve stuck to its script of raising interest rates on three occasions. The central bank also raised its growth forecast for 2018. Going forward, in 2018, the Fed has held its projection of three hikes.
Tensions on the North Korean front dominated headlines through the year. In September this year, the country reportedly tested a hydrogen bomb, believed to have the capability to strike Japan or US coast. The UN has been imposing sanctions on the rogue nation. As such, there has been a history to this crisis, but 2017 is seen as a crucial year by experts on the back of such concrete steps by North Korea. As a result, markets around the world have been jittery based on these developments, as well as worried about a war-like situation.
UP, Gujarat and Himachal Pradesh
The ruling Bharatiya Janata Party (BJP) registered massive victories in state elections this year. Earlier in March, it won a two-thirds majority in Uttar Pradesh, followed by retention of power in Gujarat and taking over from the Indian National Congress in Himachal Pradesh.
The political stability gave the markets extra fillip to believe that the Centre will be able to push crucial reforms through states and give it the desired numbers at Rajya Sabha as well.
The government unveiled the budget a month in advance to February 1. The railway budget was merged with the Union Budget. The key development for taxpayers was the slashing of tax rate for income of Rs 2.5-5 lakh were to 5 percent, while there was a ban on cash for transcations over Rs 3 lakh. This, the government felt, will help in increasing the tax base.
The year also witnessed a surge in prices of crude. Any spike in the price of this commodity hurts the finance of importers such as India along with hurting its finances. Earlier this month, oil rose above USD 65 a barrel for the first time since mid-2015 following a shutdown of the UK’s biggest North Sea oil pipeline, which helped set the benchmark for global prices.
Infosys’ Sikka saga
An event that shook the IT sector and the markets on that day, Vishal Sikka resigned as the Chief Executive Officer and Managing Director of Infosys with immediate effect citing “a continuous stream of distractions and disruptions over the recent months and quarters… “.
Sikka came under fire from Narayana Murthy, who attacked several decisions taken at Infosys besides Sikka’s supposed lavish lifestyle.
In the first week of December, Salil S Parekh was chosen to be the Chief Executive Officer and Managing Director (CEO & MD) of the company effective January 2, 2018. Parekh has come to Infosys from Capgemini where he was a member of the Group Executive Board.
Following an intense campaign for US Presidency between Hilary Clinton and Donald Trump for a larger part of 2016, the latter won the elections in November 2016. Earlier this year, Trump was sworn in as the 45th President of the United States. Mike Pence was sworn in as the Vice-President.
The year saw historic rollout of single tax regime in the country—goods and services tax (GST) on July 1. The move ended more than 11 years of intense discussions between Centre and the states and the GST council announced four slabs of 5, 12, 18 and 28 percent rates for commodities across board.