Samvat 2077: Here’s what to expect from various sectors in the new Samvat

The Indian market is witnessing fireworks in the run-up to Diwali, also the beginning of the new Samvat 2077, and analysts believe the new Samvat will augur well for the market with COVID-19 coming under control and the economy back on track.

“The pace of reforms is picking up and on the market, I remain as bullish as ever. I was extremely bullish in June and I am extremely bullish even today,” said ace investor Rakesh Jhunjhunwala in an interview with CNBC-TV18.

“I think the money is going to come not slowly, not fast, but in a Tsunami,” he further mentioned.

The Indian market witnessed sharp gains on November 9 as the key equity indices Sensex and Nifty hit their record highs of 42,645.33 and 12,474.05, respectively, in intraday trade on November 9.

Jyoti Roy, DVP- Equity Strategist at Angel Broking believes that a 10-12 percent upside in Nifty is possible in the markets over the next one year, citing the increasing likelihood of a second US stimulus package coupled with low-interest rates globally and increasing the likelihood of vaccination starting at the beginning of 2021.

“We believe that it should not be difficult for the Nifty to trade closer to levels of 13,500 by next Diwali,” he said.

Let’s take a look at how analysts foresee different sectors may perform in Samvat 2077:

Analyst: Aishvarya Dadheech, Fund Manager, Ambit Asset Management

We are cautiously optimistic about banks. We believe the market is factoring a lot of negativity on delinquencies and all. Banks have reported better quarterly numbers so far. Though the picture will be clear by Q1FY22, the price of good quality banking and financial stocks are low. We believe it is a great time to buy good quality banking, financial stocks.

The auto sector is also poised to do well. In the one-year timeframe, auto stocks can give decent gains. The question on shared-mobility after the COVID-19 is over will meaningfully benefit two-wheeler space.

IT has already seen a lot of traction. The quarterly numbers and deal pipelines have been promising. We are cautiously optimistic about IT for the next few months. On the valuation side, the IT sector looks a bit stretched.

The metal sector’s fortunes will depend on how the recovery on the global side happens. If we look at the way the second wave of COVID-19 is panning out in the US and Europe, we may possibly see some derailment in the economic activity. However, if the dollar index continues to devalue, we may see some sort of attractiveness in commodity prices. Metal sector may remain volatile.

The pharma sector will continue to see traction. The US business is bound to see some stabilisation. Even India business is showing some traction. There is still a lot of juice left in the pharma sector for the next one to two-year perspective.

In the FMCG sector, staples have done phenomenally well in the last one year. Now, this is the time for consumer discretionary stocks to participate. This is the space where one should actively look at for alpha creation for the next year.

Analyst: Rusmik Oza, Senior VP (Head of Fundamental Research) at Kotak Securities

We expect the defensive sectors like IT, FMCG and Pharma to be resilient for the next few months till the time we don’t get a proper vaccine.

As we advance towards getting the vaccine and the economy starts going back to normalcy we can expect the economy-driven sectors to start outperforming.

Banks, auto and metal sectors could come into focus next year and take the front seat.

Since most of the economy-driven sectors are prone to market correction one should have an accumulation strategy in them rather than investing at one go.

One can start accumulating economy-driven stocks in the next few months with a 2 to 3-year view.

For the time being, one should remain invested in the defensive and as the market corrects they can slowly keep shifting part or more of these holdings into economy-driven sectors.

Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities

Earnings scenario has improved with the quarterly results with majority of earnings beating expectations.

Management commentaries highlight confidence in demand revival. Sequential recovery is seen in high frequency indicators where sector rotation theme is playing out well with laggards playing catch up.

The BFSI and domestic cyclical sectors like cement and real estate have started outperforming.

From the last few months, the entire market narrative has positioned towards defensive play where IT and pharma stocks were outperforming the market, while cyclical stocks were on backstage.

We could see some recovery in domestic cyclical sectors like banks, Infra and cement sectors.

With a sequential improvement in high-frequency indicators, cyclical sectors are likely to gain the most.

With Q2 results, the outlook of the banking sector is improving; it remains to see the sustainability of the recovery. Further, the BFSI sector provides the best valuation comfort at current level.

Analyst: Jyoti Roy, DVP – Equity Strategist, Angel Broking

We expect both the cyclical and defensive sectors will continue to do well.

Going forward we expect the broader markets will do well as compared to the benchmarks and within broader markets cyclical should do well, given the revival in earnings in FY22.

However, we expect the recovery to be uneven with different sectors charting out different recovery paths.

Within cyclical sectors, we are positive on auto, cement and low-ticket consumer durable stocks as demand has rebound at a much faster rate and is expected to remain strong.

We also expect sectors with revenue visibility will continue to do well.

We expect sectors like agrochemicals, chemicals, two-wheelers and tractors along with IT and pharma will continue to do well given strong growth dynamics.

Santosh Joseph, CEO and Founder, Germinate Wealth Solutions LLP

The revival of consumption and resuming of a normal economy with vaccine news should help the consumer sector recover.

Apart from this, the beaten-down sectors in the past year are likely to see more action as they turn attractive.

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