On Sunday, November 12, 2023, between 6 p.m. and 7.15 p.m., Indian stock markets will open for a special Diwali muhurat trading session to mark the start of the Hindi accounting year Vikram Samvat 2080. Muhurat trading is a typical activity practised by Indian traders since it is considered an auspicious time to start something new or make good investments.
According to Hindu mythology, Muhurat marks the beginning of a new 'Vikram Samvat,' which is followed by commercial communities such as Marwari and Gujarati in opening their accounts. On the eve of Diwali, most Hindu investors seek the blessings of Goddess Laxmi by worshipping their books of account and beginning fresh account books for the following business cycle.
Except for 2017, historical data suggests that the BSE benchmark Sensex closed the muhurat day trading sessions on a favourable note. The year 2017 (Samvat 2074) had the worst Diwali muhurat session in the previous decade, with the Sensex losing 0.6%.
The last muhurat session (Samvat 2079), on the other hand, was the best for traders, as the Sensex gained 0.88% on that day. Despite volatility in the first half, the BSE Sensex and the broader NSE Nifty rose 6.5% and 7.1%, respectively, in the last year (till November 8). The Small and Midcap indices outperformed the benchmark indices over this period, posting robust growth of 31% and 26%, respectively.
The Indian stock market struggled in the first part of Samvat 2079 due to a number of issues including rising interest rates and bond yields, the recurrence of Covid-19 cases in China around the end of 2022, the Union Budget, and other macroeconomic challenges.
The Indian market, on the other hand, showed a stunning recovery in the second half, rebounding from its low of March 23. good attitude during the G-20 meeting, continuing fund inflows by foreign institutional investors (FIIs), increased corporate results, robust macro indicators, and good expectations for the private investment cycle all contributed to this surge.
The market capitalisation (m-cap) of BSE-listed firms reached a record high of 320 crore in the first week of June, propelling India to the world's fifth largest market after the United States, China, Japan, and Hong Kong.
Investors, both domestic and foreign, have displayed a proactive and unshakable conviction in India's long-term economic narrative, according to Axis Securities. "FIIs injected an impressive $15 billion into the Indian equity market during the last seven months of FY24, bolstering this faith even more." Furthermore, monthly Systematic Investment Plan (SIP) inflows into mutual funds increased to over 16,000 crore in September'23. According to the brokerage, "this significant increase serves as a compelling indicator of investors' steadfast confidence in India's growth trajectory."
In the future, the brokerage firm anticipates Samvat 2080 to be an intriguing year to watch for the world economy. "We begin this new Samvat with a narrative marked by 'Higher for Longer' interest rates, volatile bond yields, Middle Eastern geopolitical conflicts, and fluctuating oil prices." On the domestic front, however, the prospects for the Indian economy are significantly brighter and more hopeful."
The market is entering a critical moment, with state assembly elections in many important states taking place this month, followed by federal elections next year. "This political landscape is expected to introduce increased volatility over the next 12 months compared to current levels," according to Axis Securities' study.
Swastika Investmart analyst believes there is significant potential for solid returns in the coming year. "First and foremost, the upcoming Assembly elections in May 2024 are critical for the market, with a victory for the ruling party expected to provide a significant boost." Indian shares are now outperforming most global markets. Second, the rise in interest rates in both the United States and India bodes well for market growth," says Sunil Nyati, Managing Director of Swastika Investmart.
On a conservative basis, the Nifty has the potential to hit 24,000 if the ruling party obtains a majority in the upcoming elections, but a different political outcome may temporarily halt the existing bull market run, according to Nyati.
