After record gains for Indian equities in Samvat 2080, when both benchmarks hit fresh lifetime highs driven by strong domestic flows and a resilient economy despite global challenges, we are ready to launch the new Samvat 2081 on the occasion of the auspicious festival of Diwali. which falls on November 1, 2024.

Sensex and Nifty-50 during this period saw significant gains with Sensex and Nifty gaining around 26% and 29% respectively.

TRIVESH D, COO, Tradejini noted that Samvat 2080 it was a year of significant ups and downs, with sector performance telling a story of volatility, opportunity and recalibration. Investors witnessed both stellar gains in certain sectors and some much-needed corrections in others, he added.

The market had periods of strong bullish momentum, particularly in the first half of the year, followed by steep corrections driven by macroeconomic headwinds and global uncertainties.

However, more recently, a major shift has come from foreign investors who have started a wave of selling due to concerns over the overvaluation of Indian markets. Another factor was China’s stimulus package, which targeted economic reforms to address the housing crisis, which generated a wave of optimism and investors around the world placed their bets on China.

However, as the euphoria that led the rally started to cool down, here’s how market experts believe Samvat 2081 bodes well for Indian equities.

Outlook for Indian Stock Markets for Samvat 2081

Rajesh Ranjan Sinha, Senior Research Analyst, Bonanza Portfolio highlighted some of the notable factors that may influence the trajectory of the stock market going into Samvat 2081:

– Geopolitical concerns: Ongoing geopolitical tensions, particularly in West Asia, along with fluctuations in crude oil prices, are critical factors that could affect market stability.

– Earnings Growth: Corporate earnings will remain a focal point as investors assess the health of various sectors.

– US Elections and Indian State Elections: Upcoming events like US presidential elections and Indian state elections will also impact the stock market movement.

– Internal flow: Domestic inflows have been a major support for the Indian market, absorbing selling pressure from foreign institutional investors (FIIs).

Meanwhile, Pranav Haridasan, MD & CEO, Axis Securities noted that Samvat 2081 marks a significant year for the global economy, beginning with a global rate cut cycle. The US Fed last month cut rates by 50bps to 5% – the first such move since pandemic lows – with expectations for two more cuts before the end of the year. Back home, the RBI kept policy rates unchanged in the latest MPC meeting while changing its stance from “withdrawal of accommodation” to “neutral”. That said, we subscribe to the view that a rate cut or two could materialize in Samvat 2081, depending on the trajectory of growth and inflation, Haridasan added.

While the long-term growth story for Indian equities remains stronger than ever, current valuations leave limited room for expansion. This means that corporate earnings growth will be a key driver of market returns. Picking stocks with a balance between growth – at a reasonable price – and quality will be key to achieving good returns in the coming year.

TRIVESH D pointed out that as moving forward, it is evident that the euphoria that fueled the rally has begun to cool. If we compare the data over the last 20 years, the Nifty’s annualized returns in the last three years have fallen to 13% from a long-term average of 16%. This suggests a narrower trading range and tempered expectations for Samvat 2081.