Samvat 2081: A Test of Investor Resilience

As we enter Samvat 2081, the Indian equity market stands at a critical juncture. The market has grown in size, and domestic money has become a powerful stabilising force, but risks remain. With India’s high valuations, weak earnings and FII outflows, the next year may test the resilience of retail investors. Shashikant Singh takes a closer and comparative look at the scenario to get a sense of what lies ahead 

As we look back from Diwali 2023 to Diwali 2024, the Indian equity market has had a stellar run, barring the past one month. Nifty has surged over 26 per cent during this period, marking it as one of the most exciting years for investors. This remarkable growth was primarily driven by a flood of retail money flowing into the market. Domestic investors, particularly those investing in equity mutual fund schemes, have been pouring in more than ₹20,000 crore every month or nearly USD 3 billion. This robust local support has made the market nearly unstoppable, even as global uncertainties loom large. 

Over the past year, equity indices have exhibited strong performances, in particular the Nifty Power index leading the way with an impressive 79.86 per cent return, driven by a higher demand for energy. The Nifty PSE and Nifty CPSE indices followed closely, with 72.03 per cent and 69.27 per cent returns, respectively, reflecting investor confidence in public sector enterprises. Meanwhile, the real estate sector also saw significant gains with the Nifty Realty index posting 68.34 per cent returns.