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It has been a dream run for Indian markets in the year 2017. The Nifty50 closed above 10,000 levels for the first time in July 2017 but there were as many as 36 stocks which gave 10x return than the Nifty index in the same period.
The Nifty50 raced from 10,000 levels recorded on 26th July 2017 to 10,600 in January 2018 which translates into a gain of nearly 6 percent but as many as 36 stocks rose more than 10 times in the same period.
Stocks which gave 60-480% return from the period July 2017-January 2018 in the S&P BSE 500 index include names like Jai Corp, VIP Industries, Divi’s Laboratories, KEI Industries, Torrent Power, Adani Transmission etc. among others.
Stocks which more than doubled your wealth in the same period include names like HEG, Graphite India, Rain Industries, Bombay Dyeing, Phillips Carbon Black, Jai Corp, Meghmani Organics, Himadri Speciality, PC Jeweller, Gujarat Alkalies, VIP Industries, and Bombay Burmah.
For the year, the Nifty50 rose by about 29 percent but analysts caution investors to tone down their expectations from equity markets for the next 12 months. The index might at best give a low-teen return but the traditions of Nifty hitting fresh record highs is likely to continue.
"The stupendous rally which we saw was driven not only by liquidity but also by hope of earnings and economic recovery (due to reforms by Modi government) going ahead, which had been lagging for many quarters in the past," Mahesh Patil, Co-Chief Investment Officer of Aditya Birla Sun Life AMC said on the sidelines of Aditya Birla Capital conference.
"That kind of returns seem unlikely in 2018 though earnings and economic recovery look possible is the word coming from Aditya Birla Capital. What it expects is 12-15 percent return in the current year and the similar kind of uptrend is likely to continue in 2019 & 2020 as well," he said.
Analysts do not expect a major correction on D-Street but a 3-5 percent correction could give a good entry point to long-term investors. However, investing should follow a staggered approach to investing because the upside remains limited.
Markets have been relentlessly rallying day after day with most stocks at their 52-week highs. The Midcap and smallcap universe in particular clearly seem to be in overvaluation zone.
“This is more of a trader's market currently and the margin of safety for short-term investors is pretty low. Hence, new investments, if to be made for the short to intermediate term, are exposed to higher volatility and price risks,” Saurabh S Jain, MD, SSJ Finance & Securities told Moneycontrol.
“We believe that if market indices are to correct by 3-5%, it will be a healthy sign for a sustained bull run to continue. We also believe that the budget will be rural and infra focused which will benefit sectors like Agrochemicals, Cement, FMCG and 2 wheelers,” he said.
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