Samvat 2080 Begins: What Lies Ahead for Indian Stock Markets?

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Dear reader,

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

Since last Diwali, the benchmark indices Sensex and Nifty have rallied around 10% each.

Initially, the Sensex and Nifty hit record highs soon after Diwali in December 2022, but later plunged to 52-week lows in March and again scaled back to record highs in September.

So, it was indeed a volatile year.

Tata Motors, L&T and ONGC were the top gainers rising between 50-63% while Infosys, UPL and Adani Enterprises stood as the top losers.

The year gone by was primarily a good one for PSU bank stocks as stocks of these lenders put past their asset quality concerns and latched on to growth once credit cycle picked up. The Nifty PSU bank index has surged over 53% since last Diwali!

Other notable sectoral gainers were real estate and automobile.

All was not so good at the start of this year when a big corporate activity took down one of the biggest Indian conglomerates. The Hindenburg report sent shockwaves in the stock price of Adani stocks, and some of them are still reeling under pressure.

Apart from that, despite facing geopolitical tensions, inflation and higher interest rate concerns, Indian benchmarks posted strong gains.

Samvat 2079 was a reminder of trusting the old techniques over the new ones as value stocks outperformed growth stocks. Rising inflation and interest rate hikes hammered growth stocks this year as well.

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 2080.

The primary one is general elections that are going to happen next year.

What Next?

The benchmark indices Sensex and Nifty tend to sway wildly in a year when several macros are shifting. And 2024 could be such a year for several reasons.

Indian investors may have to contend with some major macro changes in 2024 that could jolt their perception of the stock market risk...

Geopolitics

Geopolitics is back to dominating the financial headlines again in 2023. But there is a difference this time.

Financial markets have barely reacted to the Israel-Hamas war.

After the prolonged Russia-Ukraine tussle, geo-political risk in the Israel - Palestine region should have unnerved investors. But it did not.

Also, these are not the only regions posing massive geo-political risks. There are the China-Taiwan tensions too.

But global investors are too optimistic of such wars having very limited economic costs outside the warring states.

Any major hurdles to global trade, because of the geopolitical risks can, however, send market indices spiralling downwards.

Election Jitters

Elections not just in India but also in the US could cause severe jitters, albeit temporary, for the stock markets.

Anticipation of key policy changes could keep certain sectors completely out of the radar of investors.

Therefore, stocks in the overvalued zone or with poor earnings could be the earliest casualties of such election led market crash.

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 2080, 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 2080, 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.

Check out the recent video where Rahul Shah talks about the three midcaps stocks set to take a giant leap.

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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