Stocks signed off 2020 on a quiet note with the Nifty briefly crossing the 14000-level for the first time. Though the benchmark indices ended on a flat note, the New Year mood remained ebullient on the hopes of a global economic recovery and the rollout of the Covid-19 vaccine.

Investors are also expecting strong growth in earnings, favourable policies in the budget and more importantly central banks continuing to pursue accommodative policies, which could see liquidity chasing riskier assets.

The Sensex ended with gains of 15.7 per cent and the Nifty 14.9 per cent for the year — much less than the 43 per cent gain of Nasdaq and 43 per cent of Korea’s Kospi though they did rise 60 per cent from their March lows.

Analyst said the year had an important lesson for investors — equities may be volatile, but they remain a rewarding asset class.

The Covid-19 pandemic lorded over market sentiments even as it led to major changes in which companies conducted their business, while it floored several sectors such as aviation and hospitality.

However, with the unlocking of economies worldwide and incremental number of cases coming down, the economy began to recover from a record contraction in the first quarter.

Though the pandemic affected various sectors, it brought good tidings to pharmaceuticals, IT and telecom. Pharma and tech stocks emerged as investors’ favourite with the Nifty Pharma gaining almost 61 per cent and the Nifty IT almost 55 per cent.

Some stocks were in rarefied territory such as Tanla Platforms which rose 2,281 per cent or Adani Green trading almost 834 per cent higher than its 52-week low in March.

In 2021, the focus will be on the economy and how inflation pans out. Attention will also be on the budget which reports indicate will boost spending.

However, with several segments of the market having seen a sharp upmove, the next area of interest could be industries that could benefit from the economic recovery.

“After a tumultuous 2020, we expect 2021 to look markedly different on the growth front. We remain constructive on the GDP growth trend. We expect a still accommodative monetary policy stance to support the recovery and structural reforms to lift medium-term growth prospects,” a note from Axis Mutual Fund has said.

The Sensex opened modestly higher on Thursday at 47753.11 and witnessed volatility to hit the day’s high of 47896.97 and a low of 47602.12. It later closed 5.11 points higher or 0.01 per cent to its new closing record of 47751.33.

The broader NSE Nifty crossed the 14000 level for the first time, touching a record intra-day peak of 14024.85. The 50-issue index pared gains to close at 13981.75, down just 0.20 points. HDFC was the leading gainer among the Sensex stocks on Thursday, rising 1.65 per cent. TCS was the biggest loser, shedding 1.33 per cent.

“As we enter 2021, the market is sitting on an all-time high and is showing resilience on the back of abundant liquidity, positive developments on the vaccine front and signs of economic recovery,” Siddhartha Khemka, head of retail research, Motilal Oswal, said.

“We expect Nifty earnings to remain flattish in 2020-21 while expecting a sharp rebound in 2021-22. Thus, the overall structure of the market remains positive. With the economic activity continuing its recovery, it could lead to start of earnings upgrade cycle,” Khemka said.

However, intermittent corrections cannot be ruled out as there is a risk of a second wave of Covid-19 and thus sustenance of economic recovery holds the key, he said.

"From next 12 months perspective, we are positive on IT, BFSI, Healthcare, Telecom, Auto and Consumer” Khemka said.