Mumbai: Samvat 2073 started on a soft note for Indian equities, with the benchmark indices ending marginally lower in the special Muhurat trading session to mark the traditional new year on Sunday . This was the first time since 2012 and the sixth in the last 20 years the key indices closed weak on the Muhurat trading day . Mid and small-cap stocks, however, ended strong.
Muhurat trading is a one-hour special trading session conducted on Indian bourses on Diwali day wherein mostly the domestic traders actively participate. Traders make token trades with an intention to take home profits as making money during Muhurat trading is considered auspicious.
After opening on a positive note and rising as much as 0.5%, the momentum in the indices fizzled out amid caution ahead of key global events such as the two-day monetary meeting of the US Federal Reserve and US elections, due in the next few days.
The Nifty closed down 12.30 points, or 0.1%, at 8625.70 and the Sensex ended down 11.30 points, or 0.04%, at 27,930.21. The BSE Midcap and BSE Smallcap indices gained 0.5% and 1%, respectively . Among sectors, pharmaceutical firms outperformed.
Samvat 2072, which ended on Friday , saw the benchmark indices Nifty and Sensex gaining 10.4% and 8%, respectively . Beating the benchmark indices, BSE Midcap and Smallcap indices gained over 20% each in the period. The first few months of the last Samvat saw stock markets being weighed down by concerns over slowdown in the Chinese economy and the US Federal Reserve hiking rates for the first time in nearly a decade in December 2015.Equities got a boost post Union Budget in February amid expectation that global central banks will continue with their accommodative policies and due to a better monsoon.Among sectors, BSE oil and gas, metal, finance and auto indices gained the most, by 19-47%.
Market strategists believe one should brace for volatility as crucial global events are scheduled over the next two weeks. The US Federal Reserve is likely to stay put on rates in its November 1-2 meeting but its commentary will be closely watched for hints on whether it will hike rates in December.Thereafter, markets will be on the edge till the US Presidential election result is announced on November 8. Market strategists said recent polls have given a slight lead to Democratic candidate Hillary Clinton over Republican Donald Trump who is seen as anti-free trade but one cannot be certain of the outcome. US stocks ended down on Friday after the Federal Bureau of Investigation said it is investigating new emails related to Clinton.
“In this Samvat, we are going to see many events like Fed rate hike in the near future, US elections, Brexit impact, India’s Budget and most importantly , UP elections which will set the tone for the next general elections. It is going to be a challenging year as there are so many events which can go either way hence, markets will be volatile,“ said Dharmesh Mehta, MD, Axis Capital.He said one should to be prepared for sharp corrections and buy on those dips, and look for individuals as valuations are no longer cheap.
According to Bloomberg, Nifty is trading at 18.83x one-year forward earnings, higher than MSCI Emerging Markets at 13.73 times.
“It will be a year of single digits or at most low double digit returns as earnings growth is still muted and valuations are rich,“ said Gautam Chaochharia, head of India research at UBS.