Samvat 2079: What Market Experts Make Of The Year Ahead
While risks remain amid geopolitical strife and liquidity tightening, Indian markets are expected to fare well in Samvat 2079.
Samvat 2079 is finally here and the markets hope to breathe easy after braving two years of upheavals as India's growth prospects are expected bring inflows into the domestic markets.
While risks—rate hikes, recession, and geopolitical crises, key among them—will continue to hound global markets, analysts see India coming out on top.
With economic recovery and capex cycle on the cards, the consumption and capital goods sectors are likely to emerge as the important themes, experts said.
BQ Prime reached out to market veterans for their outlook for Samvat 2079. Here's what they said:
Andrew Holland, Chief Executive Officer, Avendus Alternate Strategies
Thoughts on the Samvat 2078
The market has been very volatile, but on a relative basis, India has been a star performer. We have seen Wall Street fall sharply, but Indian markets have outperformed.
Outlook for Samvat 2079
The first expectation is that the Federal Reserve and other central banks will stop raising rates, and then we will have to see how deep the recession is.
Once everything settles down, everyone’s going to look for growth, and in that sense, India is going to shine, especially with the possibility of capex-led growth.
Key Risks
We need to look out for financial risks more than economic risks as the latter has already been discounted.
We need to watch out for policy missteps, like in the case of the U.K. and Credit Suisse. Any financial problems that have been swept under the rug can spring up as key risks.
On the geopolitical front, apart from the ongoing conflict in Ukraine, the tension between China and Taiwan warrants a keen eye.
Increase in interest rates remains a key risk.
Important Themes
We will see capex in novel sectors including renewables, defence, semiconductors and electronics. India’s electronics manufacturing is poised for growth.
With recovery gaining pace, banks, autos, and consumer discretionary will be key themes.
Target
We can expect 10-12% returns from the market. The positives mentioned earlier are more likely to outdo any expected negatives.
Vikas Khemani, Co-Founder, Carnelian Capital Advisors
Thoughts on the Samvat 2078
Indian markets have outperformed, while the global markets are down 20-30% in the current Samvat.
Outlook for Samvat 2079
Prospects are positive for the next Samvat, since earnings growth has not been affected.
With the China+1, Europe+1 strategy taking hold, India will see substantial FPI inflows.
Key Risks
With quantitative tightening in full swing, rate hikes remain a key risk.
The uncertain global environment, especially the ongoing crisis in Ukraine pose a threat.
Important themes
Banking, auto, manufacturing, and industrials are going to be key themes this year.
Upbeat on IT stocks given the strength of their orderbooks.
Target
Returns can be in the range of 18-20% in Samvat 2079.
The Nifty can test 19,500-20,000 levels. The Sensex can reach 70,000 over the next year.
Milind Karmakar, Director And Senior Fund Manager, Dalal & Broacha Stock Broking
Thoughts on the Samvat 2078
This was a tough year, especially after January on account of the conflict in Ukraine, and then liquidity tightening later in the year.
Outlook for Samvat 2079
Going forward, we can see things improving significantly. Economic activity is on the mend, with GDP growth expected to be in the range of 6.5-8%, and a capex cycle on the horizon.
We can expect the U.S. Fed pivot to happen sometime in the second quarter of 2023.
Key Risks
Prolonged war in Ukraine and the worry that it’ll go nuclear will keep investors on their toes. Although, this outcome is highly unlikely.
A global slowdown is on the cards, but India is safe.
Important Themes
With economic recovery, we will see a rise in per capita income. Capex cycle will create more jobs. These developments will help consumption, capital goods, and banking sectors.
Target
Markets used to deliver 15% compounded return earlier. We might see them revert to this trend this year.
Atul Suri, Founder And Chief Executive Officer, Marathon Trends PMS
Thoughts on the Samvat 2078
The past year has been very volatile as the world has gone from inflation to recession. The rise in bond yields has been another flash point.
While the indices are masking the pain, India has been hurting, particularly technology stocks.
Outlook for Samvat 2079
In the coming year, we may not have a massive index-related rally globally because easy money is no longer available and economies have moved to quantitative tightening.
In the coming year, some sectors and countries will do well.
Rally will be growth centered, as money will find regions and sectors which promise the highest growth and that bodes well for India.
Key Risks
Now that liquidity is not present, markets will take a lot more time to consolidate and recover.
Important Themes
Corporate facing banks, capital goods, domestic consumption will be key themes in the coming year.
Target
Nifty will test 21,500 level this Samvat.
Mitul Shah, Head Of Research, Reliance Securities
Thoughts on the Samvat 2078
Samvat 2078 has been a tough year for Indian and global markets, due to numerous macroeconomic factors including the impact of Covid during first half of 2078.
Factors like high inflation globally and central banks’ monetary tightening policies in order to curb the same and unexpected geopolitical turmoil on account of Russia-Ukraine conflict, led to sharp sell-off across equity markets.
FII outflow, currency depreciation and supply chain disruptions, impacted the economy and corporate performance despite sofening in commodity prices.
Nifty has corrected by 5.4% in last one year while global Indices like Dow Jones (down 13.4%) and Nasdaq (down 28%) corrected significantly.
Market witnessed one of the highest volatility during the year. Indian equity markets, however, proved to be resilient and outperformed most developed and emerging economies globally, bolstered by healthy retail & HNI participation, expanding SIPs and lump-sum inflows which helped offset the large outflows from FPIs.
Outlook for Samvat 2079
We expect markets to remain under pressure and witness more volatility in the near term on account of deterioration in global macros and uncertainties prevailing in western economies.
However, we believe that India would see a multi-year economic up-cycle amid stronger macros, minimal impact of Covid, ‘China plus one’ strategy and various government initiatives in terms of schemes like PLI, localisation, grey list for import of critical items, etc, going forward.
Also, commodity softening, healthy Rabi crop led by normal monsoon, inflation peak-out and likely stable currency would support corporate earnings in 2HFY23. Therefore, we believe on India story and remain constructive on Indian equity as an asset class.
Key Risks
Biggest risk at present is depreciating rupee against U.S. dollar and imported inflation, primarily due to higher crude prices. This may stretch our dollar outflow and forex reserve getting impacted going forward. Sharp weakening of domestic currency and high inflation, either of these if does not fall under tolerable range may prove to be major drag on economy and equity markets.
Important Themes
Government’s focus on infra sector coupled with healthy capex would revive economic cycle. Energy crisis has recently increased attention to green energy and more options to renewable energy with aim to have cleaner source of energy. Therefore, considering all above key themes, we expect the sectors like financial, capital goods and engineering, renewable energy would play out well in next one year.
Target
Maintain our FY23-end target for Nifty at 19,000, while we introduce our Samvat 2079 Nifty target of 20,000.
Amnish Aggarwal, Head Of Research, Prabhudas Lilladher
Thoughts on the Samvat 2078
Samvat 2078 will go down in the history as one of the most volatile years where in exuberance around tech stocks and IPO boom was followed by Russia Ukraine war, multi-decade high global inflation and fastest interest rate hikes in recent times.
Outlook for Samvat 2079
Amongst this hazy global scenario, India is today looking like a pearl in the ocean with benefits from food security, domestic demand driven economy, PLI scheme across manufacturing and defence, strong banking system with decade low NPA, strong infra capex and rising investments in unicorns. Even as high inflation has impacted demand in lower and lower-middle sections, festive demand is buoyant with waned Covid impact, good monsoons, pick up in infra and real estate development [boosts employment] and strong hiring demand across sectors.
Key Risks
Uncertain global environment and expected slowdown in US and Europe remain a concern, we believe India will successfully navigate this period and emerge stronger. We continue to prefer companies with presence in emerging segments, strong balance sheets and business moats.
Important Themes
Auto, capital goods, IT, banking, telecom, consumer discretionary, and hospitals.
Target
Nifty target at 20,936.
Nilesh Shah, Group President And Managing Director, Kotak Mahindra Asset Management
Outlook for Samvat 2079
Samvat 2079 is likely to be like Diwali. There will be celebration along with loud bursting of crackers. Ukraine, U.S. Fed rate, oil, inflation and zero Covid policy of China will continue to burst.
Important Themes
Banks, capital goods, and manufacturing are likely to outperform the market in Samvat 2079. Tech and pharma will provide interesting opportunities on a bottom up basis in the correction.
Sunil Damania, Chief Investment Officer, MarketsMojo
Outlook on the Samvat 2079
As we enter the new Samvat year, some factors impacting market sentiment will start to ease. The Fed may not be as aggressive on interest rates, and besides, inflation could cool purely because of the higher base effect.
Important Themes
Capital goods, pharma and cement, will outperform, while public and private banks, NBFCs and the auto sector may wind up laggards.
We also expect mid and small caps to outperform large caps. If you look at the data from the last Samvat to the current one, there is hardly any difference between the performance of large, mid and small caps. On the contrary, small caps have performed better than large caps. Therefore, the performance of the Indian equity market going forward would be driven more by small and mid-caps. We are bullish about mid and small caps, given the yearly rise of retail investors.
By the next Samvat, we expect the market to perform exceptionally well.