Five Glittering Stocks for Samvat 2078

Samvat 2077 has been exceptionally well for the equity market. However, Samvat 2078 will be a little subdued but these five stocks will add spark to your portfolio.
Samvat 2078
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Samvat 2077 saw one of the best returns for the equity market in the last decade. Indian equity market kept rising from last Diwali. Except for a brief period in February, May, and June, there was almost a vertical rise in the Indian equity market. Frontline equity indices touched new lifetime highs with the Nifty and Sensex surpassing the 18000 and 60000 mark for the first time in history. It looks surprising that market run-up from pandemic lows of 7620 mark in March 2020 – amid lockdowns and other health challenges to the current level.

It was not only the frontline indices; even the broader market saw spectacular growth during Samvat 2077.  While the Nifty 50 gained 38.9 per cent during Samvat 2077, it was the small-cap index represented by Nifty 50 that made a killing and gained 81 per cent. The nifty Midcap index gained 64 per cent.

Even all sectoral indices also delivered positive returns, with top gainers being Metals, which more than doubled, even the Realty gained in triple-digit while PSU Banks was up by 93 per cent. On the other hand, Pharma (+23 per cent), FMCG (+29 per cent) and Private Banks (+30 per cent) were underperformers as defensives took a breather. The theme of Samvat 2077 was high beta, cyclical, and value.

Such performance was on the back of huge FIIs flows in equities. Inflows during Samvat 2077 were the highest ever at Rs 1.6 lakh crore. The optimism in the Indian equity market was due to benign global liquidity, containment of COVID-19 cases, significant pickup in the pace of vaccination, sharp recovery in corporate earnings, and a market-friendly budget. Macroeconomic trends saw a good recovery, with high-frequency indicators (GST collections, e-way bills, PMI readings, power & fuel demand) improving month-on-month. Exports have emerged as a growth engine with India reporting the highest ever export in a single quarter in the second quarter of FY22.

The country witnessed the third consecutive year of normal monsoon which is also likely to aid rural demand, and with the government balance sheet in good stead, we expect the government to press the fiscal pedal to drive growth over the next 6-12 months. Corporate India too surmounted the challenges posed by Covid with unprecedented cost containment measures with a parallel improvement in the balance sheet as well as cash-flows.

Not all the Samvats have been great for equity investors, however, we have witnessed positive returns in most of the years. It is especially true for a large-cap index such as Nifty 50. Out of the last ten years, we have seen negative results only once. Nevertheless, in the case of mid-cap and small-cap, we have seen negative returns three times out of the last ten years. Nonetheless, the subsequent returns after these negative returns are more than enough to compensate for the negative returns. For example, in Samvat 2069 (2012-13) we saw a negative return from both mid-cap and small-cap index, however, in the following year both of them gained in excess of 50 per cent.

The following table shows the last ten-year returns from different indices during different Samvats.

Equity Market Performance during Different Samvats

Samvat Nifty 50  Nifty Mid Cap  Nifty Small Cap 
2068 10.41% 14.42% 4.08%
2069 12.83% -2.10% -9.42%
2070 28.32% 51.97% 59.58%
2071 -1.24% 13.90% 6.86%
2072 11.66% 23.84% 24.04%
2073 19.02% 19.60% 26.44%
2074 6.02% -6.44% -21.62%
2075 11.18% -5.55% -8.64%
2076 11.09% 14.48% 8.69%
2077 38.92% 64.24% 81.06%

Going ahead, there are some negatives emerging on the horizon like commodity price inflation, supply chain issues, the normalcy of monetary stimulus, and a rise in interest rates. The result so far by India Inc., for the quarter ending Q2FY22, shows some pain on the margin front due to the rise in commodity prices and impact on the top line due to supply chain issue. Therefore, we cannot expect similar returns in Samvat 2078.

Most sectors and stocks are discounting the best in economic recovery in their prices. Hence, it becomes very tricky to select stocks that will outperform markets going ahead.

In the following section, however, we are giving you stocks where the street is yet to give value to their future potential.  

About the author: IE&M Team
IE&M Team
Indian Economy & Market is an Indian media and information platform producing data-backed news and analysis on all the vital elements at the intersection of the economy, stock markets, mutual fund, insurance, commodities, currency, technology, startups and business.

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