Sensex rises 16% in 2020 despite Covid-19 pandemic, posts highest returns since 2017

Sensex ended the roller coaster ride of 2020 at a record closing high, buoyed by positive sentiments in global markets. The index has gained 15.75% in 2020 despite falling to its multiyear low in March when coronavirus threat roiled the Indian equity market. The 30-share index has managed a huge gain of 6,497 points in 2020 to close at a record high of 47,751 on the last trading day of 2020. During the session, the index also touched its all-time high of 47,896.

Similarly, Nifty rose 14.90% or 1,813 points during the year to close at a life time high of 13,981. It crossed the key level of 14k for the first time and further touched a record high of 14,024 during the trading session today.

The benchmark indices have clocked highest returns this year since 2017. Sensex ended 2017 with a gain of 29.58% while Nifty rose 30.28%.

Benchmark indices are in a buoyant mood due to progress in development of coronavirus vaccines, results of US presidential election, hopes of economic recovery, expectations of additional stimulus in the US and consistent FII inflows in the last two months.

The year 2020 will remembered for the strong rebound Indian stock market staged from its March lows. Sensex and Nifty logged their highest losses ever after rising number of coronavirus cases in India and the resultant lockdown in a majority of states took a heavy toll on the financial markets on March 23.

Sensex, which crashed 3,934 points to 25,981 on March 23 has rebounded 83% since then.

Share Market Highlights: Sensex ends at record high, Nifty below 14K; HDFC, Maruti, Dr Reddy top gainers

Similarly, Nifty closed 1,135 points lower at 7,610 during the same session. The 50-share index too has gained 83% from its amrch low.

Interestingly, Sensex and Nifty had hit record highs before the pandemic induced stock market crash.

On January 20, 2020,  Sensex hit a record of 42,274 riding high on the upcoming budget expectations. Nifty too reached a lifetime high of 12,430. Clocking the strongest rebound ever, Sensex has surpassed its January highs in last month of this year by a strong 5,622 points.

Nifty too has zoomed 1594 points past its January highs today.

With the bull run likely to continue in 2021, here's what analysts said on the movement of Sensex and Nifty.

Vinod Nair, Head of Research at Geojit said, "We have a target of 14,500 for Nifty50 in December 2021, which provides a moderate view on a YoY basis. This target is based on supreme high valuation of 20x P/E of one-year-forward basis, expecting high earnings growth next year. Nonetheless, the target has a upward bias due to positive economic development possible in 2021 based on the progress of vaccination and fiscal support. Today, the main indices may show a vague outlook, but we expect the broad equity market to be benefited by the dual effect of high liquidity and earnings growth. We expect mid and small caps to outperform the main index next year. "

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities said, "For the trend following traders,  13,935 should be the sacrosanct level to watch. Trading below the same, we can expect quick correction up to 13,875-13,850  On the flip side, 14,025 would be the immediate hurdle for the day traders. Above the same, we could expect further uptrend till 14,075-14,125.

Sumeet Bagadia, Executive Director at Choice Broking said, "On the technical front, Nifty has been rising continuously with higher highs & higher low formation, which suggests more bullishness for near term. At present, Nifty may find the resistance at 14,100 mark while on the downside, support is shifted to 13, 800 levels.".