Where Is The Indian Market Headed?

The Domestic Market Was Among The Few That Generated Positive Returns In 2022. But The Recent Fall In Stock Prices Seems To Have Shaken Investor Confidence. Will It Get Its Mojo Back?

- Rajiv Ranjan Singh

IN 2022, the Indian stock market was one of the few markets in the world that yielded positive returns. The biggest contributor to the success story was the Adani Group that singularly contributed to 49% of the market cap gain in the NSE 500 stock portfolio.

In a U-turn in 2023, the valuation of Adani Group companies fell 48%.

On January 24, 2023, the day Adani Enterprises FPO opened for subscription, in a dramatic synchronicity, the Hindenburg Report on the group was released. Within 10 days, the total market cap of Adani Group fell from ₹19.21 lakh crore to ₹10.08 lakh crore, a 47.54% plunge translating into ₹9.13 lakh crore of value erosion.

The Hindenburg report, amongst myriad allegations against the Group, mentioned that over $100 billion of chairman Gautam Adani's growth in the then net worth of about $120 billion came in the past three years through stock price increase of the group's seven key listed companies, which have risen an average of 819% in that period.

The Hindenburg report raises serious questions about the fate of the Indian market that soared high on the zooming market cap of Adani stocks.

What was the secret sauce that energised the Indian stock markets in 2022? And can it perform an encore in 2023??

Too Much Money Chased Too Few Stocks

Indices reflect the entire stock market trend and performance of the country. The Nifty 50 is the collection of top 50 companies based on free float that forms almost three fourth of the total market capitalisation in India. Thus, if the index constituents are performing well it is believed the overall market is buoyant and strong.