Vikram Samvat 2080 began on a promising note with benchmark indices notching their second-best muhurat session performance in five years.

The Sensex and the Nifty gained up to 0.55 per cent on all-round buying that was steered by IT stocks as investors are bullish on the sector staging a comeback.

Optimism ruled that a durable Indian economy would see domestic equities outperforming their overseas counterparts.

At the special one-hour trading session held by the bourses on Diwali where domestic investors largely make token purchases, the 30-share BSE Sensex advanced 354.77 points or 0.55 per cent to close at 65259.45, while the broader Nifty 50 rallied 100.20 points or 0.52 per cent to end at 19525.55.

This is the second-best gain made by the benchmark indices in the past five years. The best was in last year when the Sensex rose 0.88 per cent.

In Sunday’s trading, 28 of the 30 Sensex stocks finished in the green as investor wealth rose Rs 2 lakh crore.

Broking circles said that IT stocks led the rally on expectations that the new year would bring better tidings for the sector as central banks are likely to halt their interest rate tightening.

They said that given the muted performance of these counters this calendar year, IT could be among the outperformers in Samvat 2080.

Infosys led the gainers list among the Sensex stocks as it rose 1.41 per cent.
It was followed by Wipro, Asian Paints, TCS, NTPC, Titan, Reliance Industries and others that were up by up to 0.88 per cent.

The broader markets also put in a good show with the S&P BSE midcap index rising 0.67 per cent and the S&P BSE small-cap index, 1.14 per cent.

IT was the top gainer in the sectoral indexes accompanied by metals, realty, energy, consumer discretionary and industrials, reflecting all-round buying.

Analysts said volatility will continue in the short term given the conflict in West Asia and mixed signals from the US Federal Reserve.

Investors should be stock-specific and take exposure to quality names or sectors that could benefit from a resilient Indian economy.

The analysts said that even though foreign portfolio investors (FPIs) have been net sellers in recent times, strong retail participation as evident in mutual fund inflows should provide a cushion against a major crash in domestic indices.

“Indian equities are expected to outperform most other global markets in the face of continued geopolitical uncertainties and relatively higher domestic economic growth,” Sunil Shah, director at Khambatta Securities, said.

“The major themes will be domestic consumption and premiumisation, enabling companies to post strong earnings growth aided by margin accretion. Infra and construction plays are expected to do well as the government’s thrust on infrastructure development is seen to continue,’’ Shah said.

He added that despite rich valuations in the small mid-cap universe, companies with fundamentally strong businesses and good earnings growth continue to justify their valuation.

``If US bond yields start coming down by the second half of calendar year 2024, FPIs will come back to the party. Upcoming state and general elections can make the market move sideways. Inflation, interest rate trajectory, and geopolitical tensions will remain the key risks,’’ Shah said.

Brokerages are recommending that investors take a look at sectors such as consumer discretionary, real estate, auto, auto ancillaries and infrastructure this year.

``Entering into Samvat 2080, we believe India would continue to shine and expect markets to maintain their outperformance. We believe that over the next couple of quarters, sector rotation would be an important driver along with the overall market uptrend,” Motilal Oswal, group MD & CEO, of Motilal Oswal Financial Services, said.

“We expect sectors like BFSI, discretionary consumption, construction & real estate and high growth niche sectors to drive the overall market,’’ Oswal said.

Axis Securities said in a note that investors should look at companies with higher growth potential and reasonable valuations.

The brokerage rooted for companies with higher earnings visibility and firms with proven track records.

Some of the other parameters which it recommends are leadership position in the respective business and having the right mix of domestic focus and export-oriented themes.