Will Indian stock markets continue to deliver strong returns in next Samvat? Key risks to watch out for – Mint

While the economic recovery is expected to be on track, analysts believe that the coming Samvat year is expected to be a year of normalization. 

“The next Samvat is likely to give normalized equity returns in low double digits, which means Nifty hovering around the levels of 20,000. Nevertheless, a keen investor will continue to find significant wealth creation opportunities as India story continues to unfold in the next year and beyond,” said Mohit Ralhan, Managing Partner & Chief Investment Officer of TIW PE.

Analysts further said that it will be unfair to assume that the benchmark indices will deliver similar returns in the short term given indices have rallied significantly in the last year. 

“Benchmark index returns in the short term may not be the right way to assess the investment opportunity. A carefully constructed portfolio which harnesses the tailwinds, which the Indian economy is expected to enjoy in the coming years, should deliver 12-15% compounded returns over the medium term,” said Krishna Kumar Karwa, Managing Director, Emkay Global Financial Services on Samvat 2078 and outlook for equity market.

Karwa expects all the sectors to do well over the medium term. Hence, he believes that over the medium term, investors can make significant wealth by investing in domestic equities.

Macro headwinds like high oil prices, supply chain disruptions, the debate on transient versus structural inflation, the possibility of hardening interest rates across the globe are expected to keep global and local markets volatile.

“After the spectacular returns of in Samvat 2078 investors should prepare for modest returns in Samvat 2078. However, as always, certain sectors and individual stocks will outperform. The challenge is to identify these potential winners. Sectoral rotation always happens. One of the best performing sectors during Samvat 2078 would be banking since there are clear signals of credit growth, which was muted last year,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Experts believe that the star performers of Samvat 2077, realty and metals, will continue to be resilient since the boom in these segments appear to be multi-year stories. Also, construction related segments like cement, ceramics, paints, adhesives and electrical also stand to benefit from the construction boom.