Samvat 2062 a blast for investors

As Samvat 2062 draws to a close tonight, investors in all three asset classes "" equity, bullion and real estate "" can look back with uniform satisfaction at a year of unprecedented buoyancy in returns.

The Sensex stocks earned over 57 per cent returns while gold yielded a return of 28.24 per cent, silver 59 per cent and real estate about 35 per cent.

Three years ago, in Samvat 2059, equities had turned in better results as the BSE Sensex soared almost 61 per cent and the broad-based Nifty over 58 per cent. However, the returns on bullion and real estate were modest.

The sparkle may well continue, as the outlook for all three assets is bright. However, an encore next year may be elusive.

"The stock market does look a bit stretched but with no slowdown in corporate earnings, investors are likely to smile in Samvat 2063, too. Ditto with precious metals. However, there could be a marginal correction in real estate prices," said a banker with the wealth management division of a private bank.

According to property consultant Knight Frank, real estate has been giving more steady returns. "The return on real estate could be anywhere between 30 and 40 per cent, depending on the location. The trend is uniform across the country," said Knight Frank India Chairman Pranay Vakil.

The return on real estate has perked up since Samvat 2060 and the three-year compounded annual growth rate has been around 33 per cent. Before that, the return on this asset class was negligible, even negative.

For the Sensex, it has been four Samvats of handsome returns in a row. It is the same with the Nifty.

Both had offered negative returns in Samvat 2058, but the tide has turned since Samvat 2059.

Gold, in contrast, has all along been offering positive returns while silver prices dropped marginally last year.

Many equity investors shifted to gold after booking profits in the stock market, according to Bhargav Vaidya, a chartered accountant and bullion analyst.

Last Diwali, the price of 10 grams of gold of 995 purity was Rs 6,895. On Friday it is Rs 8,842, a return of over 28 per cent.

In May, the price of gold peaked at Rs 10,665. Had it stayed at that level, the return would have been over 50 per cent. Similarly, the price of silver peaked at Rs 24,435 on May 3 but subsequently came down, shaving almost 25 per cent off the market value.

Equities, in contrast, have maintained a steady run despite the meltdown in May this year. The stock indices have regained the momentum on high corporate earnings.