 "Markets kickoff Samvat 2080 on bullish note; Sensex, Nifty gain over 0.5%")
The Indian markets were ushered into the new Hindu calendar year — Samvat 2080 — on a bullish note on Sunday. After the ceremonial one-hour trading session, the benchmark Sensex and the Nifty closed with gains of over half a per cent.
The undertone was even more bullish in the broad market as the Nifty Midcap 100 index and the Nifty Smallcap 100 index finished 0.6 per cent and 1.14 per cent higher, respectively. This was the sixth straight year when the markets have ended positive on Muhurat trading day, when making ceremonial purchases is considered auspicious.
After hitting an intra-day high of 65,419, the Sensex closed at 65,259, up 355 points, or 0.55 per cent. The Nifty50 index rose 100 points, or 0.52 per cent, to close at 19,526. The market breadth was strong with 2,906 stocks ending with gains and only 688 ending with losses. Barring two, all Sensex components ended with gain. Information-technology leaders Infosys and Wipro were the top gainers, going up 1.4 per cent and 0.9 per cent, respectively.
HDFC Bank, Infosys, and Reliance Industries were the biggest contributors to index gains.
During Samvat 2079, the Sensex and the Nifty rose about 10 per cent each. Experts say the returns for the benchmark indices could be in high double-digits in Samvat 2080 because valuations have slipped below historical levels. Barring ITC, all five top stocks in the indices have underperformed during Samvat 2079.
Experts are of the opinion that if share prices of heavyweights such as Reliance Industries, HDFC Bank, Infosys and ICICI Bank fire up, they could single-handedly boost index returns.
More From This Section
Analysts say returns on midcaps and smallcaps could plateau after skyrocketing last year. In Samvat 2079, the Nifty Midcap 100 rose 32.7 per cent, while the Nifty Smallcap 100 index gained 38.4 per cent — their best showing since Samvat 2070.
The Nifty currently trades at a 12-month forward P/E of 17.6x, which is at a 13 per cent discount to its 10-year average.
“I expect smallcap and midcap stocks to fall within six months and recover in the second half. The runup from the lows it hit in 2020 has been non-stop, and valuations have become frosty. Many stocks are trading at 30-50 P/E, which is not sustainable. The global and local headwinds will provide the opportunity for correction,” said G Chokkalingam, founder of Equinomics.
“At current valuations, largecaps appear to provide more margin of safety than midcaps and smallcaps amidst the prevailing scenario of higher bond yields, rising crude prices, and the stronger dollar index,” added a note by Axis Securities.
Stepping into the new year, most headwinds are global in nature. Bond yields in the US, although off from the peak of 5 per cent, still are at elevated levels. The flareup in West Asia is also adding to uncertainties. Experts said US Fed action and the oil price trajectory could have a large bearing on the performance of domestic equities.
Locally, elections will be a big influencing factor, particularly during the first half of the year.
“Samvat 2080 is set to start with multiple states going into election in November-December 2023, which would set the stage for General Election in May 2024,” said a note by Motilal Oswal.
A note by HDFC Securities said: “We expect markets to be volatile till the 1st half of 2024 even as the outcome of state and Central elections will be watched closely as would be the repercussions of the two geo political events. Though the local fund inflows have remained robust, we would need resumption of FPI flows once the global risk appetite revives.”
Both the NSE and BSE held special ceremonies before the market opened on Sunday.
“Muhurat trading is a testament to our shared financial aspirations. Each trade made during this auspicious time promises growth and the spirit of unity among investors. Be a long-term player. This is the best way to participate in India’s growth story,” said Ashishkumar Chauhan, managing director and chief executive officer, NSE.