In a memorable year for the equity market, Dalal Street investors added a whopping Rs 80.62 lakh crore to their wealth in 2023 as a raft of positive factors powered a stellar rally in stocks.

Experts said India's strong macroeconomic fundamentals, political stability owing to the BJP's success in recent elections in three significant states, optimistic corporate earnings outlook, signals from the US Federal Reserve about three prospective rate cuts next year and heavy retail investors participation played a major role in fuelling the stock market rally in 2023.

Till December 28 this year, the 30-share BSE Sensex has jumped 11,569.64 points or 19 per cent.

The market capitalisation of BSE-listed companies has climbed sharply by Rs 80,62,310.14 crore so far this year to reach an all-time high of Rs 3,63,00,558.07 crore. At the close of trade on Thursday, the market valuation of BSE-listed firms reached the lifetime high.

The Indian market has demonstrated resilience, emerging as one of the standout performers within the broader emerging markets basket, Sunil Nyati, Managing Director of Swastika Investmart Ltd, said.

According to him, 2023 is not just a good year for the Indian stock market but also a triumph for retail investors.

"Retail investors, no longer prone to panic during corrections, are confidently holding onto their investments, ready to ride the wave of India's economic ascent," he added.

Indian equities added another feather to its cap as the combined market valuation of all listed companies on the leading stock exchange BSE reached the USD 4 trillion-milestone for the first time ever on November 29 this year.

"The surge can be attributed to a confluence of factors: the impending elections fostering political stability, promising whispers of rate cuts in 2024, and a much-needed decline in energy prices, finally enticing foreign investors back into the fold. This influx of foreign capital propelled largecap indices to new record highs," Nyati said.

It took just two-and-a-half years to hit the USD 4 trillion landmark after the market capitalisation (m-cap) of all listed companies on the BSE touched the USD 3 trillion-mark on May 24, 2021.

"With the BJP's sweeping victory in the state elections of Rajasthan, Madhya Pradesh and Chhattisgarh, the confidence of investors regarding political continuity post 2024 Lok Sabha elections has received a big boost. Already, the sentiments were buoyed by a healthy trend in corporate earnings growth and resilient domestic macros, and is now likely to strengthen further.

"This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies," according to a note by Motilal Oswal Broking and Distribution.

The BSE Sensex reached its all-time high of 72,484.34 points on December 28 after hitting a 52-week low of 57,084.91 points on March 20, this year.

The BSE bellwether index made monthly gains in eight while it fell in the remaining four during the year. The months of November and December were the most rewarding in terms of returns. The 30-share BSE benchmark jumped 4.87 per cent in November while so far in December, it has rallied 8 per cent.

"India's strong macroeconomic fundamentals, marked by robust GDP growth, moderating inflation, and a stable rupee, played a crucial role in this resilience. This, coupled with improving global conditions like softening inflation, central bank pauses on rate hikes and continued earnings growth, led to a market rally across Indian indices," Sampath Reddy, Chief Investment Officer at Bajaj Allianz Life Insurance, said.

A rally in the broader market also added to the overall optimism. The BSE smallcap gauge has jumped 13,455.51 points or 46.51 per cent till December 28 this year while the midcap index climbed 11,213.69 points or 44.29 per cent.

"Midcap and smallcap stocks dominated the headlines, fueled by robust macroeconomic fundamentals and ample domestic liquidity. However, the final two months witnessed a dramatic shift, with largecap indices stealing the limelight," Nyati said.

Also, a number of mainboard Initial Public Offerings (IPOs) and listing of shares have propelled the rally in the equity markets.

"Earlier in the year, the issues in the US banking sector negatively impacted markets globally. The monetary tightening by the Fed also had a negative impact. Geopolitical issues like the war in West Asia raised concerns temporarily but had no lasting impact on the market. Towards the end of the year, the global market construct turned positive with declining US bond yields and dovish message from the Fed.

"In India, the robust performance of the Indian economy and good corporate earnings contributed to the rally," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Reliance Industries is the country's most valued firm with a market valuation of Rs 17,63,001.81 crore, followed by Tata Consultancy Services (Rs 13,90,823.72 crore), HDFC Bank (Rs 12,94,593.58 crore), ICICI Bank (Rs 7,05,236.23 crore) and Infosys (Rs 6,48,713.08 crore) in the top-five order.

Investors became richer by more than Rs 16.38 lakh crore in 2022. The BSE barometer had ended 2022 with an annual gain of 4.44 per cent or 2,586.92 points.

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