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Indias key equity indices -- S&P BSE Sensex and NSE Nifty50 -- delivered some of the best returns globally in 2021.

The Nifty50 gained over 24 per cent, while Sensex gave a return of 22 per cent in 2021 on a year-on-year basis.

Faster economic recovery as well as low interest rates and lower number of Covid infections have been cited as reasons for the exponential growth.

Besides, higher exports, pent-up demand and healthy future prospects were pointed out by analysts as the other reasons for the growth.

However, returns could have been even higher but for the largest ongoing FPI outflows of around $12 billion, which severely harmed the equities post November 2021.

"Despite global challenges, Indian indices did well in 2021 driven by ample liquidity, low interest rates, heightened interest from retail investors and rising GDP, among others," said Deepak Jasani, Head of Retail Research, HDFC Securities.



"Flows from DIIs and retail/HNI investors remained resilient and offset the selling pressure from FPIs in the second half of the calendar year," Jasani added.

Globally, only CAC40 and S&P 500 were ahead of Nifty in terms of returns, while Sensex featured among one of the best performers in the world.

"Indian indices have outperformed almost all global peers in 2021 on a YoY basis," said Vinod Nair, Head of Research at Geojit Financial Services.

"Healthy returns were supported by robust retail participation, economic recovery, vaccine coverage and rising appetite for Indian exports," he added.

In 2021, the two indices touched a high on October 19 with Nifty at 18,604.45 points and Sensex at 62,245.43 points, whereas Nifty fell to a low of 13,596.75 points and Sensex to 46,160.46 points on January 29.

"India has done well on the vaccination front, as well as in supporting the economic recovery. Macro data points have been pretty strong while corporate earnings have seen a steady growth in the last couple of quarters," said Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services.

"India's GDP growth is pegged to be among the highest in the coming year, which also supported the markets," he added.

On a YoY basis, Tata Motors was the best performing stock in Nifty50 with a rise of 160.80 per cent, followed by Tech Mahindra at 91.30 per cent, Hindalco Industries at 87.90 per cent, Wipro at 85.90 per cent and Bajaj Finserve at 84.60 per cent.

"The year 2021 was one of the blockbuster years which gave a return of around 24 per cent compared to 11 per cent in 2020 amid the Covid-19 wave," said Gaurav Garg, Head of Research, CapitalVia Global Research.

"The indices did well in 2021 led by power, metal, realty and technology stocks. The year 2021 was far better than 2020 as broader markets also did well since they managed to hit fresh all-time highs in mid-caps and small-caps," he added.