From this Diwali to next: Pundits' market outlook

On the occasion of Diwali, as the Indian year Samvat 2065 closes, Indian stock markets could have hardly asked for a rosier script. Last year in October, the world was in the throes of an economic meltdown not seen since the Great Depression in the 1930s — one that threatened to obliterate the entire global financial system.

Equity markets dived headlong. Surprisingly, markets in the developed world countries, which actually had plummeted into a recession, dipped far lose than those in the emerging world like India and China. Consider this: in 2008, US markets dipped by 33% but India and China dropped by 66%.

By March, economic conditions, anyone would recall, were gloomy at best and doomed at worst. But the markets bottomed out soon — the NSE Nifty stood at about 2,500 while the Sensex bottomed out near 8,000 levels on March 6.

Since then, the markets have mainly headed in one direction: up. On Saturday evening (October 17), on the occasion of mahurat trading (when the markets trade for an hour), the mood’s a lot more positive.

This time last year

Last Diwali, Enam Securities was one brokerage firm that stuck its neck out predicted a 15,000 plus levels for the Sensex by this one.

“It is always easier to call the markets when valuations are in your favour and are very cheap,” said Manish Chokhani, Director and CEO of Enam, recalling how they got it right. Chokhani spoke to CNBC-TV18 in an exclusive interview.

“The outlook now is: we remain optimistic but cautious on the markets,” he added. “Certainly it is not a time where money is going to be made easily. It is a treacherous period ahead particularly for the rest of the world. The Indian conditions of course have become a lot better.”

“I would be actually happier if the market did not trend up very strongly. We got people to issue paper to mostly the foreigners who are happy to put money in. We remain ranged for a while. That is the best scenario because if you actually shoot up like you did in the end of 2007 and early 2008, the worst thing that can happen to us, we go up and we go straight down again,” Chokhani said.

Valuations of stocks were now richly valued, Chokhani said, and fundamentally, earnings of Indian companies would need to surprise above expectations for the markets to head up further from these levels.