As we say a good bye to Samvat 2079 and welcome Samvat 2080, a hindsight view portrays a rollercoaster year with benchmark Nifty 50 managing double-digit returns and 221 stocks turning multibaggers. Investors also turned wealthier by a staggering Rs 64 lakh crore during this time.
India remains in a sweet spot going into the new Samvat 2080 with a strong balance sheet of corporate India and improving health of the domestic banking sector. Yet, a higher for longer interest rate narrative, geo-political tension and the election year offer substantial challenges. “The Indian economy currently finds itself in a sweet spot of growth and is well-poised for continued resilience in the face of global challenges. Samvat 2080 will be quite a fascinating year to watch out for the global economy. We embark on this new Samvat with a narrative marked by ‘higher for longer’ interest rates, volatile bond yields, geopolitical conflicts in the Middle East, and fluctuating oil prices,” Pranav Haridasan, MD & CEO at Axis Securities said while sharing his views on Samvat 2080.
Haridasan sees the Indian economy notably brighter and more promising among its peers. In his view, the Indian equities will likely deliver double-digit returns in the next 2-3 years with the support of double-digit earnings growth.
To take this argument further, ETMarkets brings views of five market wizards viz. Raamdeo Agrawal, Sanjiv Bhasin, Madhu Kela, Prashant Jain and Christopher Wood, who piece together the likely triggers that may impact stock markets, individual sectors and stocks through the new year.
Here is what they recommend:
Raamdeo Agrawal, Chairman, Motilal Oswal
I know that after 10 years, all three i.e. mid, small and large caps will deliver the same number. You can see the last 15 years, 9%, 10%, 8% is what they have returned. I will tell you exact return numbers over the past 15 years — 9% for the index, 10% for mid caps and 8% again for small caps. This is a 15-year number. Go and check! But in the last six months and one year, it has been mind-blowing. I mean, like the index has given 8%, mid and small is 20%. So, that excitement brings all the crowd into the large and small caps and in fact, after 20% return, you should run from there and go to the large cap because the large cap is going to do that next 20%.
See, Anulom-Vilom, can you breathe further? You have to first release. So, now mid cap and small cap, they are breathing up. Now they have to breathe down. Large cap has done the breathing down. They have to breathe up. Speaking is very easy. But shifting the location there or sitting there is tough. So, people who have patience, they will reap the benefits.
Sanjiv Bhasin, Director, IIFL Securities
In the next one-two months maximum number of weddings happen particularly in north India and across India and you cannot believe there is no banquet hall available. I have four weddings which I have to attend, part and some of the relatives. You cannot believe what the chock-a-block is as far as hotels go. So Indian Hotels would be an outstanding play. People are no longer compromising on price. They want the best of quality. They want the best of ambience and Indian hotels are saying that they are booked. I wish they had more hotels in Delhi, Bombay and maybe Gurgaon also. So, I am very-very sure that the hotel industry is going through the roof.As an ancillary to that, car sales will pick up. Maruti becomes a very good play. Ashok Leyland has just told you that they are now…, I mean they were the third largest bus maker in the world and only gaining traction. So, autos and entertainment is something which you can easily play. You can add some of the other consumer discretionaries which will again be part and parcel of that.
Madhu Kela, Founder at MK Ventures
Union Elections 2024 will be the key driver that will decide the course of the market not only till next Diwali but also for a few years to come. The earnings growth of the company is very strong and the interest rate scenario would likely be stable also.
While these are positive factors for the market to do well, election overhang will create volatility and decide future impact especially during the 2nd half of 2024.
We expect banks, manufacturing, and capital goods segments to do well. Budget spending on defense and infra, interest rates peaking and continuing push to Make in India and China +1 factors are the basis of our expectations. Defensive sectors like pharma will also be important to combat possible market volatility due to news flow and macro events.
To allocate Rs 10 lakhs across sectors for Samvat 2080, one can consider the following percentages:
1. Banks: 30%
2. Capital Goods: 30%
3. Manufacturing: 30%
4. Pharma: 10%
This allocation provides a diversified portfolio that includes sectors with growth potential (banks, capital goods and manufacturing) while also including a defensive sector (pharma).
Prashant Jain, 3P Investment Managers
I think Nifty, Sensex can compound 12% in a longer term and I do not see a challenge in that. Markets are now close to historic multiples, slightly higher but there are three reasons why Indian multiples may settle higher than the past. And these are — one, our growth is likely to be higher. In the last 20 years we have grown around 6%. I think we should grow 7% or even higher in the current decade and next so higher growth means higher multiples.
Second, the cost of capital has come down and India has moved from a high inflation to a low inflation country. Last 9-10 years inflation has been sub 5%. The gap between Indian and US yields is shocking. It used to be 6% 15 years back. Today it is 2.5% and so the lower cost of capital and higher growth means higher PE multiples.
And thirdly, the volatility of Indian markets is slowly trending lower and that is because of the improving share or improving flow of local savings towards equities. So, I think you have faster growth, lower cost of capital and lower volatility. So, I think even though these multiples are not cheap one should not remain in cash in the large cap space. I think 12% or maybe slightly higher returns are possible.
One very interesting thing which I said earlier is that the US yields have touched 5%. So, now they may actually go to 5.5% or 6% in the six months or one year time, we do not know but the move from 1% to 5% has been digested by the markets which I think was a hanging sword all along. So, to that extent I think there is greater comfort in these markets.
The economic growth outlook of India is strong. Corporate leverage is at a 15-year low. Bank NPAs as you said are not there. So I think you can tick literally all the boxes as far as macro is concerned. Companies are making money. Corporate profit to GDP is back to 5%, which is where it was post Lehman. So I think net-net India is in a very good space. Many other EMs are out of favour for some reason or the other.
Christopher Wood, Global Head of Equity Strategy at Jefferies
I have got four property stocks in my Indian portfolio. We have entered our third year of a property upturn. Now, last year when the RBI was raising rates, the property stocks did very well, I believe in 2021 when people recognised that the property upturn was starting after, I remember, a seven-year downturn. Then we had RBI raising rates. So, the property stocks corrected but although the property stocks corrected last year, the actual property upturn continued. The property upturn was not impacted at all by the monetary tightening. And then in the last few months, when the markets become more hopeful that we are seeing the last of RBI rate hikes, the property stocks are rallied again. And it remains the case that, yes, the Indian property sector or Indian property stocks are very small relative to the size of the economic opportunity.
I would say you should do both [invest in real estate and real estate stocks]. My base case, it (property cycle uptick) can last as long as a downturn, which is seven years.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
