Dear reader,
Let us start off by wishing you a very Happy Diwali and a prosperous year ahead.
Between Diwali 2023 and 2024, the Nifty50 and Sensex delivered impressive returns of over 24% respectively, outpacing many global indices.
With benchmarks touching new highs, Sensex surpassing 85,000 and Nifty50 crossing the 26,000 mark, the past year has been a period of highs and lows, excitement, and uncertainties.
Samvat 2080 was characterized by significant events influencing market trends, including the presentation of both interim and final Union Budgets for FY2024-25, India's general elections, inflationary pressures in developed economies, and escalating geopolitical conflicts.
Despite these challenges, Indian markets displayed extraordinary resilience on the global stage.
The year was undoubtedly volatile, with M&M, Adani Ports & SEZ, and Bharti Airtel emerging as the top gainers, rising between 70-83%. Conversely, IndusInd Bank, Bajaj Finance, and Nestle were among the top losers.
Capital goods stocks had a particularly strong year capitalizing on economic growth. Meanwhile power and telecom sectors also recorded significant gains.
Geopolitical tensions significantly impacted markets, contributing to increased anxiety and sharp fluctuations. Inflation, especially in developed economies like the US and Europe, added to the volatility.
However, signs of stability emerged in the latter half of the year from economies like the U.S. and Japan, where inflation began to moderate and growth picked up.
Throughout this tumultuous period, the Indian economy demonstrated strength and resilience amidst global turmoil.
Samvat 2080 was a reminder of trusting the old techniques over the new ones as value stocks outperformed growth stocks.
While rising bond yields and the ongoing war in the Middle East are dark clouds hovering over the Indian markets, we have a lot to look forward to in the upcoming Samvat 2081.
Looking ahead to Samvat 2081, we anticipate that the Indian market will continue to trend upward, aiming for the 28,400 level by Diwali 2025.
This goal aligns with the rising trendline on the yearly chart that connects significant highs since 2014, and it reflects insights from previous major rallies.
However, the upward movement is expected to be accompanied by volatility rather than a straight path.
Indian investors may have to contend with some major macro changes in 2025 that could jolt their perception of the stock market risk...
Geopolitical tensions are back at the forefront, particularly with the ongoing issues in the Middle East.
Surprisingly, the financial markets have shown resilience in the face of the Israel-Hamas conflict, seemingly unshaken despite the historical precedent of geopolitical strife causing turmoil.
Following the protracted Russia-Ukraine war, one might anticipate heightened investor anxiety, yet the markets are keeping their cool.
Even though crude oil prices have ticked up recently, there hasn't been a dramatic spike to cause alarm. Still, it's important to remain vigilant-any significant disruptions to global trade could send market indices spiralling downward.
The upcoming US elections in November 2024 could shake things up globally. Investors are loading up on US dollars and bracing for volatility as they await the outcome of this pivotal event.
The elections will dictate trade policies and investor vibes, with both the House and Senate races adding another layer of intrigue.
he crucial US elections is set to be one of the most impactful events for global markets and economies this year going into next.
With gold prices soaring, it's clear that the uncertainty is already causing ripples.
Historically, elections ramp up market volatility, and once the dust settles, everyone will be keenly watching how the new government's policies unfold.
Monetary policy decisions by the Federal Reserve and the Reserve Bank of India will significantly impact market dynamics.
With inflationary pressures continuing to be a concern, any shifts in interest rates or liquidity conditions could significantly influence market dynamics.
A rate hike might slow economic growth and negatively impact corporate earnings, while maintaining or lowering rates could encourage investment but heighten inflation worries.
As the financial landscape evolves, the potential for thrilling twists and turns is ever-present, making it essential for investors to stay informed and agile in their strategies.
While all this happens, there are a lot of megatrends shaping up in India and if selected carefully, certain stocks from this sector can become future multibagger stocks.
For starters, you can check out these themes on Equitymaster's Indian stock screener.
Here apart from getting access to readymade watchlist following various themes you can also create your own watchlist and track some of the highest potential stocks.
Going into Samvat 2081, examine whether the current market environment is conducive for picking stocks or whether we are in bubble territory.
If you want to invest profitably in Samvat 2081, then your strategy should be based on what you want from your portfolio.
Decide what you want from your portfolio and stick to it.
Legendary investor Warren Buffett would agree when we say that only when the tide (i.e. liquidity) goes out, will investors find out the stocks which were strongest.
Your portfolio may or may not be reeling under some pressure, but now is not the time to panic. We believe investors will be far better served if the focus is on individual stocks by following a bottom-up approach to investing.
As always, we recommend buying stocks with solid fundamentals only when they are available at attractive valuations. Time will then work in your favour and provide you with satisfactory returns.
In short, ignore the noise, stick to fundamentals and you should do well.
Well, that's all from us.
We once again wish all Equitymaster readers a very Happy Diwali!
Have a great year ahead!
PS: As usual, our editors have been busy on YouTube.
Speaking of market trends, remember: the market can stay irrational longer than you can stay solvent. This quote from economist John Maynard Keynes serves as a crucial reminder for investors, highlighting that downturns often come without warning.
To gain insights into the current market correction, check out Tanushree Banerjee, Research Analyst at Equitymaster, in her latest video discussing these dynamics.
Happy Investing!
For information on how to pick stocks that have the potential to deliver big returns, download our special report now!
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