Moneycontrol Pro Panorama | Samvat 2079 will be a year to remember 

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Dear Reader, 

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Samvat 2078 is likely to end with a two percent decline for the Indian markets, and that’s a good thing. A look at global markets would give us an idea of how strong the Indian market is. Samvat 2078 was a tough year in many respects for the world market.

The Indian markets started the year on a strong base. Samvat 2077 saw decade-high gains of 38 percent in the Sensex and 40 percent in the Nifty. Two back-to-back strong returns when the world is falling apart is a tall task.

Indian market returns are resilient despite the fact that we saw record fund withdrawals by foreign investors. Indian investors bringing in record funds to the market helped the broad indices close flat.

Quantitative tightening, the Russia-Ukraine war, rising energy prices, inflation, a strong dollar and rising interest rates during Samvat 2078 made it one of the worst years in terms of the global environment for equity markets. A $20 trillion stimulus during COVID created inflationary pressures that refused to abate. Amid such headwinds, the country posting flat returns is a strong performance by any standards.

There were sparks of strong performance despite the overall gloom. Stocks like Adani Power, Adani Total Gas, Adani Enterprises, Bharat Dynamics and Mazagaon Dock Shipbuilders doubled during Samvat 2078.

Nifty heavyweights ITC and Mahindra & Mahindra posted returns of 54 percent and 48 percent, respectively. Around 207 scrips beat the index during the Samvat year, of which 143 stocks gained over 10 percent.

The big question is, what about Samvat 2079?

The headwinds that were present in Samvat 2078 are getting strong in Samvat 2079. The Russia-Ukraine war is getting more intense, threatening a global energy and food crisis. Europe is crumbling with financial and political crises brewing all over the continent. This winter is likely to be a hard one in the continent with many countries and their citizens finding it difficult to pay for their heating fuel.

The US is facing a mid-term election and is more likely to go into recession in the coming Samvat year. China, despite its weak economy, is breathing down Taiwan’s neck.

During these dark times, India is among the few relatively strong countries. The country has its problem of inflation and rising interest rates, but it still has robust growth in comparison to other countries.

For the equity markets, it may be a tough year as the US dollar grows stronger and the US bond yield keeps on attracting money away from riskier assets. The second round of selling is expected anytime during Samvat 2079, especially in global markets, as economic data continue to be muted. Indian markets will join the global fall though it may not be as bad as we may see in the world market.

Samvat 2079 will be a year to remember for a long time as we are heading into a perfect storm.
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Shishir AsthanaMoneycontrol Pro