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Last Updated : Nov 13, 2020 10:06 PM IST | Source: Moneycontrol.com

Samvat 2077: Will it be a year of gold or equity?

Analysts and brokerage firms are bullish on market prospects as events such as the US election is over and positive reports on the vaccine front are giving hopes that soon COVID-19 will be under control.

Diwali 2020 marks the beginning of Samvat 2077, the new Hindu accounting year. While Samvat 2076 was quite volatile for the market, the new Samvat is expected to augur well for equities.

Analysts and brokerage firms are bullish on market prospects as events such as the US election is over and positive reports on the vaccine front are giving hopes that soon COVID-19 will be under control.

Improving macroeconomic indicators are also signalling bulls will have enough fodder for jumping higher.

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Outlook for equity

The markets have fully recovered the losses and with the US elections uncertainty behind, Samvat 2077 looks promising for the emerging markets, said Naveen Kulkarni, Chief Investment Officer at Axis Securities.

"Nifty by next Diwali can touch 14,000. Markets have discounted FY22 earnings already and if earnings visibility improves, 2023 earnings will start getting factored. So, for FY23 Nifty earnings could easily cross Rs 700 and in that scenario a 14.000 on the Nifty index looks very likely," Kulkarni said.

India's ace investor Rakesh Jhunjhunwala, in an interview with CNBC-TV18, said he is extremely bullish on the Indian market.

“The pace of reforms is picking up and on the market, I remain as bullish as ever. I was extremely bullish in June and I am extremely bullish even today,” said ace investor Rakesh Jhunjhunwala in an interview with CNBC-TV18.

Global brokerage house Goldman Sachs has upgraded India to 'overweight' and raised Nifty's 2021-end target to 14,100.

Goldman Sachs is of the view that the market has moved higher as investors gained confidence in improving economic momentum.

Global brokerage firm Nomura is of the view that Nifty may hit the level of 13,640 by December 2021.

Nomura is of the view that the improvement in sentiment around the pandemic and improving high-frequency growth indicators and corporate earnings as the economy opens up could lead to market overlooking potential growth concerns that can emerge over time.

Outlook for gold

It is feared that the factors that are expected to be positive for equities may erode the shine of gold.

However, gold too has a bright prospects in Samvat 2077.

Jharna Agarwal, Head, Anand Rathi Preferred said with most central banks around the globe providing unprecedented liquidity and low-interest rates coupled with economic stimulus, gold is not expected to lose its sheen.

Kunal Shah, Head of Commodity Research at Nirmal Bang pointed out that the road to sustained recovery is a long process. So far, central banks have infused $13 trillion and more are expected in the coming days.

"We believe investors should start accumulating gold with a 2-3 year horizon. If massive liquidity causes the US inflation to shoot up, gold will go up too and in case things look grim, then, too, gold will go up," Shah said.

Sunilkumar Katke, Head - Commodities/Currency at Axis Securities pointed out that among the factors that may help the yellow metal prices recovery in the near future are the weakening USD considering the new president-elect Joe Biden from Democratic Party and the challenges he may face in driving policies, especially when the Senate majority is with Republicans.

Besides, the second major factor to consider is the ultra-loose monitory policy of central banks that makes money availability easier, driving inflation northward; the same may support gold prices, Katke said.

Katke pointed out that the most important factor to be considered is the increase in risk appetite of investors in the US and across the globe on account of vaccine news that is driving equity markets close to their all-time highs if the momentum fizzles out due to political instability or COVID vaccine effectiveness and reach, there as chances of investors coming back to the yellow metal as a safe haven supporting the prices.

The crux

Analysts are positive on equities and gold both. One's investment in gold and equities depends on their risk appetite.

Experts advise in order to avoid any confusion, one may have around 10-15 percent of their portfolio in gold and the rest can be invested in different asset classes, including equities.

While choosing equities, one must be careful in stock-selection. Sectors like IT and pharma look attractive but even in those sectors, all stocks cannot go higher.

Bright outlook of gold and equity indicates one has better chances to make money. How you maximise your gains will completely depend on your own strategy.

Set your investment targets, do your research and then invest, say experts.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​
First Published on Nov 13, 2020 12:22 pm
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