After a two-year liquidity-fuelled bull run, the BSE Sensex faced its moment of reckoning in 2022 as Russia marched into Ukraine, the US Federal Reserve came out all guns blazing in its war against inflation and a cataclysm engulfed global financial markets.
The aftershocks of the COVID-19 pandemic combined with geopolitical upheavals, a supply shock in the energy markets and synchronised monetary policy tightening by central banks across the world meant the global economy was engulfed in a constant tangle of 'polycrisis'.
But, the unwavering faith of domestic investors kept Dalal Street relatively unscathed and the Indian benchmarks shrugged off the gloomy cues with aplomb.
After a lacklustre spell for most of the year, Sensex started picking up momentum as the festive season approached. It closed at its all-time high of 63,284.19 on December 1.
However, hopes of a year-end Santa Claus rally were dashed as spiralling COVID cases in China sparked renewed fears of a global pandemic wave, sending bulls scurrying for cover.
The Sensex is up just 1.12 per cent year-to-date (till December 25), but is still the world's best-performing large market index.
In fact, none of the major global indices have managed to muster gains in this brutal year, including the Dow Jones (down 9.24 per cent in 2022 so far), FTSE 100 (dipped 0.43 per cent), Nikkei (shed 10.47 per cent), Hang Seng (lost 15.82 per cent) and the Shanghai Composite Index (dropped 16.15 per cent).
The credit for this relative outperformance goes largely to the domestic retail and institutional investors, who kept the faith despite the steady drumbeat of negative headlines and absorbed the record selloff by foreign funds.
Compare this to the panic of the global financial crisis of 2008, when the Sensex had collapsed by over 50 per cent as FIIs pressed the exit button. Foreign Institutional Investors (FIIs) have pulled out a record Rs 1.21 lakh crore from Indian equities in 2022 so far, in lockstep with rate hikes by the US Fed which have triggered an exodus from emerging markets, including India.
In contrast, domestic investors displayed the sharp instincts of market veterans and 'bought the dip' with a vengeance.
The share of retail investors' shareholding in NSE-listed firms reached an all-time high of 7.42 per cent (around Rs 19 lakh crore) as on March 31, 2022.
Mutual fund investments through the systematic investment plans or the SIP route too have been on a rising trend despite market fluctuations, touching a record high of Rs 13,306 crore in November (both equity and debt segments).
This pushed the Assets Under Management (AUM) of the 43-player MF industry to a lifetime peak of Rs 40.49 lakh crore at the end of November.