The benchmark Sensex closed 0.09 percent down at 19,426.71 points, while the Nifty declined 0.06 percent to close at 5,905.10 points, in a lacklustre session the last day of 2012 on concern over the US 'fiscal cliff'.
Analysts say that while markets gained globally, Indian markets outperformed others because of the reform push that came after September
Mumbai: After a dismal show a year ago, the Indian stock market emerged as the third best performer globally in 2012, with a return of over 25 percent for a key index on the back of $24 billion foreign fund inflows and robust buying by domestic investors.
The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ranked third in terms of returns after the yields of the 50-scrip Thailand Set Index and Germany's 30-share Deutscher Aktien IndeX.
The benchmark Indian index ended the year Monday at 19,426.71 points, 25.70 percent or 3,971.79 points higher than the previous year's close at 15,454.92 points. This is the best performance of the benchmark index since 2009.
The Sensex recorded a high of 19,612.18 points and a low of 15,358.02 points in 2012, data available with the bourse showed.
'Markets gained globally. But Indian market outperformed others because of the reform push that came after September,' said Vaibhav Agrawal, vice president, research, Angel Broking.
Agrawal said the government decision to cut subsidies on petroleum products and liberalise overseas investment norms for the sectors like retail, aviation, insurance and banking sent a positive signal to the market.
'Government took some politically difficult decisions. It sent a positive signal to the markets,' Agrawal told IANS.
Data with the regulator, the Securities and Exchange Board of India (SEBI), showed that foreign funds pumped in $24 billion into the Indian markets.
In contrast, foreign funds had divested $357.8 billion from Indian equities and invested $8.65 billion in the debt markets in 2011, while in 2010, their investment in these two segments amounted to $29.36 billion and $10.11 billion, respectively.
Among the individual scrips that comprise the 30-share Sensex basket, the best performer in 2012 was Tata Motors, which surged almost 75 percent on the back of strong performance of its luxury car division Jaguar Land Rover.
The country's largest lender ICICI Bank jumped 66 percent, Maruti Suzuki soared 63 percent and engineering and construction firm Larsen & Toubro gained 61 percent in 2012.
The worst performer in this segment was the country's second largest software exporter Infosys, which slumped 16.5 percent. Gail India fell 8 percent, Bharti Airtel declined 7 percent and BHEL lost 4.5 percent in 2012.
'In 2013, we expect good performance of banking, IT, pharma and auto sectors,' said Agrawal.
Anis Chakravarty, director, Deloitte Haskins and Sells, said the overall for the stock markets remained positive for 2013.
'RBI has indicated interest rate cuts. Inflation is showing some moderation. Economic growth is likely to improve. So this should have positive impact on the market,' said Chakravarty.
The show at the other major bourse, the National Stock Exchange (NSE), was no different, with the broader 50-share S&P CNX Nifty registering a gain of almost 27 percent. The Nifty ended the year at 5,905.10 points.
However, on last day of the year, key indices closed in the red.