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Samvat 2078 Begins: What Lies Ahead for Indian Stock Markets?
Thu, 4 Nov Pre-Open

Dear Reader,

Let us start of by wishing you a very Happy Diwali and a prosperous year ahead.

As Samvat 2077 comes to an end, let us take a moment to review the year gone by.

Despite the recent fall, Indian share markets registered gains on a YoY basis.

Samvat 2077 was an extraordinary, fabulous year where the markets had a dream run! On average, the market registers a gain of around 16-17% with respect to benchmarks during any given Samvat.

However, during Samvat 2077, it reported a growth of 49-51%.

This year has been the best Samvat year so far in years as the market not only saw good returns but also witness new entries of many new retail investors.

The number of account holders in 2007 was 10 m. It took five years to double to 20 m in 2012 and then in 2020, it became 40 m. Now in 2021, it became 55 m in just 12 months alone.

Abundant liquidity, low-interest rate, and good performance of the corporate sector were some of the factors that lifted the market sentiment.

The market also witnessed a record surge in initial public offers (IPO), foreign institutional investors, and foreign direct investments.

All in all, market participants were in for a rollercoaster ride in Samvat 2077.

As things stand today, the Sensex is hovering over the 60,000-mark.

While, the Nifty has managed to cross the crucial 18,000-mark.

Will this Uptrend Continue in Samvat 2078?

After a stellar liquidity-driven run in Samvat 2077, market experts are suggesting that investors should brace for a volatile phase for Indian equity markets in Samvat 2078.

The market direction will be guided by a host of domestic and foreign factors that will keep the markets choppy.

These factors include:

  • Policy stance of global central banks, especially the US Federal Reserve
  • Global developments like economic recovery and China factors
  • Commodity prices and their impact on inflation and corporate earnings
  • A fresh wave of Covid infections, if any
  • IPO pipeline and liquidity with retail investors

As an investment strategy for Samvat 2078, instead of chasing index-wide returns, investors should look for companies with sound fundamentals, low debt levels and revenue and profit visibility, given the multiple headwinds.

This is also the best time to reassess your portfolio and load up on quality stocks as the uncertainty and volatility clears up.

Legendary investor Warren Buffett would agree when we say that only when the tide (i.e. liquidity) goes out, will investors find out which stocks were the 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 satisfactory returns.

In short, ignore the noise, stick to fundamentals and you should do well.

As far as our views on Indian stock markets are concerned, here are some links to videos and articles from our editors that you may find interesting:

Well, that's all from us.

We once again wish all Equitymaster readers a very Happy Diwali!

Have a great year ahead!

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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