Midcaps and Smallcaps Strategy for Samvat 2081: What to Expect in Muhurat Trading 2024

Diwali 2024 marks the beginning of Samvat 2081, and investors are keenly watching the Indian stock market after October’s correction. The BSE Midcap index dropped 7% this month, while the Smallcap index fell 4.5%, and the Sensex also slipped by 6%. Despite this, the market’s long-term performance remains strong: over Samvat 2080, the Sensex rose by 22%, and the BSE Midcap and Smallcap indices gained nearly 40%.

Why Midcaps and Smallcaps Soared in Samvat 2080

Midcaps and smallcaps thrived over the past year, largely driven by retail investors’ interest and India’s robust economic growth. Deepak Jasani from HDFC Securities highlighted that significant investments in small and midcap funds boosted these stocks from March lows to peaks in September. Retail and high-net-worth investors were drawn to these sectors due to their potential for high returns, aided by positive global and domestic investment trends.

Rahul Jain from Nuvama Wealth noted that India’s strong growth, particularly in domestic sectors like banks, autos, and industrials, fueled earnings growth and sustained the rally in a volatile global environment. Steady SIP (systematic investment plan) inflows also provided consistent support, helping Indian investors benefit from wealth creation. Political stability and government capital expenditure further bolstered market confidence, leading to a steady year for India’s economy.

What’s Ahead for Samvat 2081?

Looking forward, the Indian stock market will likely be influenced by both domestic and global factors, including the 2024 US election, central bank rate policies, and geopolitical risks. According to Shlok Srivastav from Appreciate, the global political landscape is growing increasingly tense, with rising conflicts in areas like Russia-Ukraine, Gaza, and Taiwan. Despite these challenges, the global economy has shown resilience, and the Indian market remains optimistic despite recent volatility.

Srivastav advises retail investors to consider booking profits during this period and to remain cautious amid market fluctuations. Opportunities for value investments in sectors like pharmaceuticals, banking, and auto may emerge as global uncertainties play out.

Strategy for Midcaps and Smallcaps in Samvat 2081

Experts recommend a cautious approach to midcap and smallcap stocks for the coming year. Shrikant Chouhan from Kotak Securities noted that after the recent downturn, a recovery could be likely if the market stabilizes. However, more positive news or consolidation is needed to confirm a new upward trend.

Devang Kabra from Wallfort PMS expects challenges in the midcap and smallcap space this year. With increased global uncertainties, thorough stock research and disciplined investing will be crucial. Kabra advises reviewing current portfolios regularly and investing in stocks with strong fundamentals rather than following market trends blindly.

Sneha Poddar from Motilal Oswal Financial Services points out that Samvat 2081 will start with political events like elections in Maharashtra, Jharkhand, and the US, which could impact markets. Despite a slowdown in corporate earnings growth due to rising commodity costs, Indian markets may still deliver steady returns. Poddar suggests taking advantage of any dip in midcap and smallcap valuations to accumulate quality stocks, focusing on sectors with strong growth prospects like financials, consumption, industrials, technology, and healthcare.

Key Sectors to Watch in Samvat 2081

Lastly, Kunal Mehta from Equirus advises caution in the midcap and smallcap space, emphasizing that stocks could drop sharply if earnings disappoint. He recommends focusing on sectors with sound valuations, such as private sector banks, over the next 18-24 months.

In summary, while Samvat 2081 brings both opportunities and challenges, investors are advised to adopt a careful, well-researched approach to midcaps and smallcaps, focusing on quality and sectors with solid growth potential.