At the beginning of 2022, we were still recovering from the shocks of the COVID-19 pandemic. Before taking a step ahead in 2023, let’s look at 2022 from the rearview mirror!
The year 2022 was a stellar year for the stock markets. The benchmark indices, Nifty50 and Sensex, stood tall, hitting new highs in early December. If we look at the markets from a rearview mirror, it was nothing less than an action-packed game. But there are many things we have left behind.
Here is a quick recap.
First Quarter of 2022: Crude Oil and Gold Stood Tall
At the beginning of the year, the stock market rallied to hit a new year high and later began to slide because of the tensions between Russia and Ukraine. The conflict led to supply chain crises, and because of geopolitical tensions, crude oil and gold prices skyrocketed. Crude oil hit $140 a barrel, whereas gold surpassed US $2,000 an ounce. This was the final nail in the coffin that gave rise to inflation in India and worldwide.
Second Quarter of 2022: The Inflation Story
The markets stayed highly volatile in the second quarter of 2022, and it was the same time when the inflation talks kicked in. In April 2022, the US consumer inflation for March stood at 8.5%. It was the highest since the 1980s. And similar data followed from Europe as well. The US Fed started hiking rates in March 2022. But still, the RBI’s Monetary Policy Committee meeting in April 2022 voted to keep the repo rate unchanged at 4%.
Later, in May 2022, the MPC met off-cycle and hiked the repo rate by 40 bps and 50 bps in June 2022. These consistent rate hikes put pressure on people’s pockets because of a rise in home loan interest rates.
Third Quarter of 2022: India Shining Amidst Bleak Outlook
In the third quarter of 2022, the markets consolidated and dipped again. Technically, the world was going through hard times where there were fears that consistent rate hikes to tame inflation could lead to recession.
On the other hand, because of rate hikes, the US dollar strengthened, and Indian Rupee was slowly declining. The Euro also fell to parity with the US dollar. But, amidst a bleak global outlook, the possibility of recession hitting India was zero, according to Bloomberg.
Fourth Quarter of 2022: A Strong Bullish Rebound
The bulls took charge in October 2022 and continued the rally till early December to hit an all-time Sensex high of 63,583.
Moreover, in October 2022, the mutual fund industry recorded the highest inflow of Rs 13,040 crores, showing that investors were optimistic about the markets.
India’s retail inflation dropped to a certain level, and the US Federal Reserve signalled a slowdown in upcoming rate hikes. Hence, the RBI followed in similar footsteps and hiked rates by 35 basis points.
The gross direct tax collection in the fiscal year also saw a jump, indicating that we have recovered from the pandemic and there is an increase in earnings of both companies and individuals.
Where Are We Standing Now?
Information technology and healthcare sectors which were winners during the pandemic are today the underperformers. The power sector, utilities, banking and FMCG, shined brightly in 2022.
That pretty much sums up the whereabouts of 2022.
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