Consumption, infra could light up Samvat 2080: Experts

After a decent show in Samvat 2079, which saw investor wealth surge by Rs 46 trillion, stock market experts are upbeat about the upcoming Samvat 2080.

They believe that despite the volatile global landscape owing to ‘higher for longer’ rates, high bond yields, geopolitical conflicts and elevated oil prices, the mood may continue to be upbeat due to India’s strong consumption story and infrastructure push.

Market players have, over the last few weeks, been optimistic about the consumption story, saying the two key factors that will spur consumption are more money in the hands of people and the quest for ‘revenge’ spending.

Deven Choksey, Promoter and Managing Director of DRChoksey FinServ, also pointed out consumption as a key theme in the quarters ahead. “Industrial consumption, rural consumption, and domestic consumption will all drive growth during Samvat 2080,” he said.

Experts have made note of India’s positive macroeconomic setup and the improvement in fundamentals of corporates, who are well-positioned to benefit from capex push, focus on indigenisation, production-linked incentive schemes, global technology collaborations, and focus on increasing exports.

The improvement in the strength of the corporate balance sheet and improved health of the Indian banking system are some of the positive attributes, said Axis Securities in a note. These will ensure double-digit returns in equities over the next two to three years supported by double-digit earnings growth, it added. The brokerage expects the Nifty EPS to grow at a 15% CAGR over FY23-25, as compared to 7% CAGR over FY09-FY23.

Contributions from systematic investment plans (SIPs) contributions reaching all-time highs have added flavour to the markets, but fund managers hope the New Year sees higher lump-sum investments.

“People have shied away from lump-sum investments into equities as these are considered to be costlier at these levels, though there were some flows post-correction during the last month. Of the Rs 19,000 plus crore of net flows into equity funds in October, Rs 16,000 crore came through SIPs alone,” said DP Singh, Deputy MD and Joint CEO of SBI MF.

He sees infrastructure as a theme that will do well, given the government spending. According to Singh, the PSU banking index has done well as state-owned names were quite cheaper relatively.

At the same time, the likelihood of volatility over the next few months cannot be downplayed, given the impact of El Nino on inflation, global volatility in commodities, and interest rates. The return of a strong majority government, however, will re-rate the markets meaningfully from current levels, experts pointed out.

Motilal Oswal Institutional Equities believes sector rotation could be an important driver along with the overall market uptrend, over the next couple of quarters. Meanwhile, valuations will turn out to be an important factor in stock selection to drive outperformance in portfolios, it said in a note.