What does Samvat 2078 have in store for Indian equity markets? Which sectors look investment-worthy?

Leading market experts answer these questions and help you better understand what lies ahead
After a stellar liquidity-driven run in Samvat 2077, experts are suggesting that investors should brace for a volatile phase for Indian equity markets in Samvat 2078. The market direction, they say, will be guided by a host of domestic and foreign factors that will keep the markets choppy. These include:

Commodity prices and their impact on inflation and corporate earnings
Policy stance of global central banks, especially the US Federal Reserve
A fresh wave of Covid infections, if any
Global developments like economic recovery and China factors
IPO pipeline and liquidity with retail investors

While rising input prices, especially those of crude oil and coal, have seen the markets trim gains in the past few weeks, analysts at Nomura have pencilled in 0.6-0.7% rise in inflation over the next few months as a result of this.
Sonal Varma, chief economist for India and Asia ex-Japan, Nomura, said: "We estimate the impact on headline inflation to be as much as around 1 percentage point over the course of the next six months"

As an investment strategy for Samvat 2078, instead of chasing index-wide returns, experts suggest investors look for companies with sound fundamentals, low debt levels and revenue and profit visibility, given the multiple headwinds.

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