As Samvat year 2080 kicks off on November 12 with the festival of Diwali, leading financial experts weighed in on the trajectory for the Indian stock market, amid macroeconomic stability, political resilience, and global investment trends. The market's direction in the new Samvat year and beyond hinges on the intricate dance between macroeconomic and fundamental stability, and handling of high valuations.
To be sure, Indian share market kicked off the Samvat year with a bang, with benchmark NSE Nifty 50 rising 110 points to 19,530 during Diwali Muhurat trading. BSE Sensex gained 370 points to 65,275. Bank Nifty was buoyant too, gaining 180 points to 44,000.
Here’s what works for Indian stock market in Samvat 2080
Well-managed macroeconomics is among the several factors that may work well and are crucial for the markets. "Macroeconomics being managed is very important for markets to be well-behaved," said S Naren, CIO of ICICI Prudential AMC. He stresses that India's prudent handling of indicators like the current account deficit and inflation bodes well for equities.
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Veteran investor Shankar Sharma expressed confidence in India's growth path, irrespective of whichever political party comes to power after the 2024 elections. “Whichever political party comes to power post-election in 2024, Indian stock markets won’t fall because they have seen what other parties have delivered. So let’s not waste time looking at which party comes to power. I’m bullish on India,” Sharma said.
Manish Sonthaliya, Chief Investment Officer at Emkay Investment Managers, forecasts a 15-20 percent return in Nifty for Samvat 2080, correlating it with similar Nifty earnings per share growth. “Nifty returns should be more reflective of the earnings growth in Nifty EPS and which should comfortably be between 15-20 percent,” he said.
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Sonthaliya said that India remains underinvested in global portfolios, with foreign institutional investors expressing discomfort with short-term valuations.
Additionally, Nilesh Shah, MD at Kotak Mahindra Asset Management, points to the potential influx of foreign institutional investors, stating, "Declining interest rates globally will release flows towards emerging markets, and India will be a big beneficiary." Shah encourages a focus on sustained growth, governance, and green initiatives, predicting, "Every FPI will be a buyer of India." As investors tread into Samvat 2080, these positive indicators could shape a promising landscape for market participants.
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Investors must watch these risks regarding Indian equities
Despite the optimistic outlook, experts caution investors to remain vigilant, especially regarding elevated valuations.
S Naren underscores the precarious nature of high valuations. "High valuations across the board in the current markets make it challenging for investors to make money." He suggests a disciplined asset allocation approach as a remedy.
Nilesh Shah advised investors to adopt a prudent approach. “Investors should book profits in these crazy valuations and come back at reasonable valuations,” he said.
He recommended, "Investors are advised to book profits on high valuations and then re-enter at reasonable valuations."
Manish Sonthaliya points to top-down concerns, including "the dollar index, interest rates, inflation, and state elections." These macro-level uncertainties could introduce volatility to the equity markets.
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