Samvat 2077 set to see markets post their best gains in over a decade
Motilal Oswal expects certain pockets of large-caps to be well-poised for sharp earnings improvement. It believes real estate is on the cusp of an upcycle with several supporting factors such as low interest rates, benign prices, rising affordability and low home ownership in India
Driven by stimulus measures and easy money policies, Indian markets posted their best gains in 13 years in Samvat 2077, the Hindu calendar year ending on Wednesday.
Benchmark indices Sensex and Nifty gained around 40% to touch new highs during the year, which was marked by a pandemic outbreak that set back the economy. The Nifty crossed the 18,000-mark and the Sensex the 60,000-mark during the year, both for the first time. After last week’s decline, markets rebounded on Monday, lifted by global cues and high indirect tax collections. The BSE Sensex rose 831.53 points or 1.40% to end at 60,138.46, while the Nifty gained 258 points or 1.46% at 17,929.65.
“The theme of Samvat 2077 was high beta, cyclicals and value,” a Motilal Oswal Financial Services Ltd report said. “The recent sprint of the Nifty to 15,000 in February and 18,000 in October, from pandemic lows of 7,600 in March— amid lockdowns and other health challenges—has been led by a benign global liquidity, containment of covid-19 cases, significant pickup in the pace of vaccination, sharp recovery in corporate earnings and a market-friendly budget,” it said.
For the year ahead, Samvat 2078, Motilal Oswal expects certain pockets of large-caps to be well-poised for sharp earnings improvement. It believes real estate is on the cusp of an upcycle with several supporting factors such as low interest rates, benign prices, rising affordability and low home ownership in India.
Overall, most sectors delivered positive returns during the year, including metals (up 128%), realty (113%) and PSU banks (93%) as top gainers, while sectors such as pharma (23%), FMCG (29%) and private banks (30%) underperformed. In comparison, the BSE Midcap rose 61% and the BSE SmallCap index rose 79% in the year.
“The broader market has outperformed the large cap universe in the last one year after a muted performance seen in the calendar year 2018 and 2019. Samvat 2077 returns were broad-based primarily on account of better participation witnessed across stock categories as well as sectors which was relatively narrow in the pre- pandemic years,” said Axis Securities.
“Abundant liquidity, low-interest rate, good performance of the corporate sector almost unaffected by the pandemic and, perhaps more importantly, the ‘retail stock rush’ are the factors that have lifted the market sentiment,” said V.K. Vijayakumar, chief investment strategist, Geojit Financial Services.
Meanwhile, after a stellar return in previous years, gold prices remained subdued. However, analysts are betting on the yellow metal, which is considered to be a safe haven during uncertain times. In Samvat 2077, gold prices were down nearly 6% compared to gains of 26% and 23% in previous two years.
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