Nifty 50 posts its strongest December in 20 years; a look at best-performing stocks in 2023

The Nifty 50, representing India’s top 50 companies, wrapped up 2023 with a phenomenal performance, marking eighth consecutive year of positive returns. Indian stocks remained hot picks among institutional investors due to the country’s macroeconomic stability and earnings momentum.

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The index finished the year with a gain of 20.03%, experiencing a remarkable surge of more than 65% in the final months of November and December. Notably, in December alone, the index recorded a substantial gain of 7.94%, marking its best December performance in the last two decades. The previous best December performance was recorded in 2003, when the index achieved a gain of 16.38%.

Nifty 50 has notched several record highs this year, surpassing 19,000 in June and reaching 20,000 and 21,500 levels in September and December, respectively. On December 28, the index touched a record high of 21,801 points, and it finished the final trade (Friday) of 2023 at 21,731 points, gaining 3,626 points, or 20.03%.

Factors contributing to the robust rally

Robust retail participation and strong FPI inflows: The market rally was propelled by significant retail participation and sustained foreign portfolio investor (FPI) inflows, bolstered by improved global sentiment and strong domestic economic growth.

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Recent reports indicate FPIs purchased ₹604.78 billion worth of Indian equities as of December 28, marking one of the highest monthly foreign inflows in three years.

Global factors: The decision by the US Federal Reserve to pause its rate hike trajectory and signal potential rate cuts in 2024 has significantly boosted investors’ confidence. This led to a shift in investor preference from bonds to equities. Further, the drop in key commodities such as crude oil prices further contributed to the market’s buoyancy.

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Domestic catalysts: On the domestic front, the victory of the Bharatiya Janata Party (BJP) in three key state elections signaled the potential return of the NDA in the 2024 general elections. Moreover, healthy corporate earnings, a pause in rate hikes by the Indian central bank, and the country’s robust economic growth of 7.6% in the September quarter have also lifted investors’ sentiment.

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The strong expansion in Q2FY24 has prompted the Reserve Bank of India (RBI) to revise the FY24 GDP forecast to 7% with a projected 6.5% average growth for FY25 in the first three quarters.

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Achieved $4 trillion in market capitalisation

On December 1, 2023, the market capitalisation of Indian listed companies on the NSE reached a significant milestone, crossing $4 trillion ( ₹334.72 trillion). The journey from $2 trillion in July 2017 to $3 trillion in May 2021 took about 46 months, whereas the subsequent leap from $3 trillion to $4 trillion occurred in just 30 months. This rapid ascent underscores the robust growth and resilience of the Indian equity market. As of December 29, the market capitalisation reached $4.34 trillion.

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According to NSE data, only 0.35% of the total private companies registered with the Ministry of Corporate Affairs, Government of India, are listed on the exchanges, emphasizing the vast potential for numerous companies to tap into the equity market for their funding needs.

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96% of Nifty 50 stocks closed 2023 in the green

In a resounding show of strength, 48 out of the 50 constituents of Nifty 50 concluded 2023 in positive territory, marking an impressive 96% success rate. Tata Motors led the pack with a multi-bagger return of 101%, scaling to ₹779 apiece and achieving a record high of ₹802.90.

The list of top performers also included NTPC, Bajaj Auto, L&T, Coal India, and Hero MotoCorp, with returns in the range of 51–87%.

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Other notable gainers included UltraTech Cement, LTI Mindtree, Titan Company, Tata Consumer Products, HCL Tech, ONGC, ITC, M&M, Dr Reddy’s Laboratories, BPCL, Nestle, IndusInd Bank, Hindalco, Bharti Airtel, Eicher Motors, Apollo Hospital, Sun Pharma, Adani Ports and SEZ, Britannia, Tata Steel, Grasim, Maruti Suzuki, Wipro, Axis Bank, TCS, SBI Life Insurance, Cipla, Hindalco, Divis Laboratories, HDFC Life, ICICI Bank, Bajaj Finance, Asian Paints, Bajaj Finserv, SBI, Kotak Mahindra Bank, HUL, Infosys, and Reliance Industries, with returns between 1.5% and 51%.

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On the flip side, Adani Enterprises and UPL faced challenges, finishing the year with a decline of 25.16% and 18%, respectively.

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