Market usher into Samvat 2081 with gains; Sensex, Nifty rise 0.4%

7th consecutive year of gains in Muhurat trading

Domestic equities markets ushered in Samvat 2081 with gains of nearly half a per cent, as all sectors made positive contributions. Following the one-hour ceremonial trading session, the Sensex closed at 79,724, up 335 points, or 0.42 per cent, while the Nifty 50 index finished at 24,304, rising 99 points, or 0.41 per cent.

 

The broader Nifty Midcap 100 and Smallcap 100 outperformed, rising 0.7 per cent and 1 per cent, respectively. Overall, 3,038 stocks closed with gains, while only 539 ended in the red on the BSE.

  Bourses conduct a special one-hour ceremonial Muhurat trading session every year to mark the beginning of a new Hindu calendar year. This is the seventh consecutive year that equity markets have closed with gains on Muhurat trading day.

 

While domestic markets were closed for normal trading, global cues were mixed as investors awaited the Federal Reserve rate verdict and the outcome of US elections due next week.

 

US equities rose by about 1 per cent after disappointing jobs data bolstered hopes of a rate cut.

 

Markets are entering Samvat 2081 on a turbulent note. Both the Sensex and the Nifty have dropped over 7 per cent each from their highs on September 26. The Nifty Midcap 100 is down nearly 7.2 per cent, while the Nifty Smallcap 100 is down over 3.9 per cent from their respective peaks.

 

While markets added Rs 125 trillion in value during Samvat 2080, India’s market capitalisation (mcap) is down by Rs 30 trillion from its highs.

 

Some believe the ongoing correction in the market provides a good entry point for investors who have been waiting on the sidelines for over a year. However, navigating the market landscape may not be straightforward, as equities face headwinds from factors like muted earnings growth this financial year, persistent geopolitical tensions, and relentless selling by overseas funds amid the appeal of a more attractively priced Chinese market.

 

In October, foreign portfolio investors (FPIs) pulled out a record Rs 87,639 crore from domestic stocks, triggering a 6.22 per cent drop in the Nifty — its largest monthly fall since March 2020.

 

“The Nifty returned 25 percent in Samvat 2080, so investors should be happy. However, the correction in October — the first monthly fall of over 5 per cent in 54 months — has triggered anxiety over the market performance going forward. One serious concern is the relentless FPI selling. Given India’s elevated valuations and concerns over deceleration in earnings growth, the selling might continue, impacting the benchmark indices. In such a scenario, investors should focus on stock-specific investment and companies with good earnings visibility,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.

 

 

With more companies missing earnings estimates than meeting them, analysts are lowering earnings growth expectations for FY25 from 10 per cent to below 3 per cent. This limits how much the markets can rally from here. Despite the recent decline, the Nifty trades at 21.8 times its 12-month forward earnings, slightly above its long-term average of 20.7 times. Also, the broader Nifty Midcap 100 trades at high valuations of 31x, compared to its 10-year average of 17x.

 

“While the long-term growth story for Indian equities remains strong, current valuations leave limited room for expansion. This means that growth in corporate earnings will be a pivotal driver of market returns. Stock picking with a balance of growth — at a reasonable price — and quality will be critical to achieving good returns over the coming year,” said Pranav Haridasan, managing director and chief executive officer of Axis Securities.