Did Muhurat Trading Set the Tone for Bullish Samvat 2082?
Moreover, given the strong accumulation of short positions by foreign investors, a revival of short-covering cannot be ruled out in the near future, market observers said.
After gaining over 0.4% in the Muhurat session, the Nifty ended at 25,868.60, up 0.1% or 25.45 points. The Sensex ended at 84,426.34, up 0.1% or 62.97 points. Both indices gained almost 3% over the past week.
“Diwali to Diwali returns are expected to be 10-12%, which is much higher than the subdued returns in Samvat 2081,” said A Balasubramanian, managing director and CEO, Aditya Birla Sun Life AMC.
agenciesPrices in Big Factor
“Gains are likely to be led by consumption growth, acceleration in credit growth on the back of Reserve Bank of India (RBI) interest rate cuts and a positive surprise on the tariff negotiation front,” Balasubramanian added. He said there was a high probability of a constructive outcome of the tariff negotiations with the US.
Sensex and Nifty have gained 5.9% and 6.4% since last Diwali. The Nifty Midcap 150 index advanced 4.5% while the Nifty Smallcap 250 index declined 3.6% during the period.
During Tuesday’s special session, the Nifty Midcap150 rose 0.2% while the Nifty Smallcap 250 advanced 0.7%. Of the 4,178 stocks traded on the BSE, 3,023 advanced while 954 declined. Cipla emerged as the biggest gainer on the NSE, rising 1.6% on Tuesday. Bajaj Finserv advanced 1.2% while Infosys, JSW Steel and Grasim Industries moved 0.7% higher.
“Stronger Q2 earnings would signal economic recovery and support equity-specific gains, while a strong monsoon would boost rural consumption in the FMCG, auto and consumer durables sectors,” said Dhiraj Relli, managing director and CEO, HDFC Securities. He said improving corporate performance is likely to attract foreign institutional investor (FII) flows back to India and further boost local stocks.
Overseas investors bought shares worth ₹2,176.4 crore in October after selling shares worth more than ₹1,00,000,000 since June. In eight of the past 12 months, global investors have been net sellers of Indian stocks.
According to Balasubramanian, while the quantum may be debatable, foreign inflows are likely after a favorable customs result in November. “As there is a strong short build on the FII side, a short-covering rally is expected which could push the Nifty higher by around 3,000 points in the next six to 12 months,” he said.
The Sensex and Nifty hit record highs of 85,836.12 and 26,216.05 respectively at the end of September 2024. Both indexes are about 1.5% away from those record levels.
Relli pointed out that the reduction in global interest rates will make India more attractive to investors looking for yield, which may cause capital inflows to resume. “We expect Indian markets to deliver low double-digit returns in the current Samvat as we expect 9% earnings growth in FY26 followed by mid-life growth in FY27,” he said.
For Balasubramanian, the record recovery in the precious metals market, which has pushed gold and silver prices to new highs, may see profit-booking, which will help stocks. “None of the precious metals are expected to deliver exceptional returns. Equities are expected to outperform next year,” he said. Between the two, silver may appreciate more, he added.
The business community actively participates in the Muhurat session at the time of Diwali and makes token transactions with the intention of taking home the profits. Making money at this trading hour is considered auspicious and sets the tone for the coming year.
The market is closed on Wednesdays.