After a record year for the benchmarks, investors have toned down their expectations for Samvat 2078 on account of high valuations, rising commodity prices and anticipation of a hikes in interest rates. Investors will herald Samvat 2078 in a special one-hour session on November 4.

A spectacular Samvat 2077 saw the Sensex playing down all the anxieties surrounding the pandemic as it catapulted past the 60000 mark and hit an all-time intra-day high of 62245.43. The Nifty surpassed 18000 to touch 18604.45 on October 19.

However, the markets have come under pressure over the past few sessions because of concerns over valuations, selling by foreign portfolio investors (FPIs) and some corporate earnings missing street expectations with rising raw material prices playing spoilsport.

“Equities will continue to give positive returns in Samvat 2078. However, one should not expect a repeat of the huge gains that was seen during this year. Rising crude oil prices which pose upside risk to inflation and interest rate hikes by central banks could act as a dampener. Investors should be stock and sector specific,’’ an analyst with a foreign brokerage said.

Brokerages have identified various themes that could deliver positive returns.

Some of their favourites include infrastructure, travel & tourism, metals, real estate, banking and consumption driven sectors.

“The rich valuations of the Indian market and of most sectors after the sharp re-rating in the multiples of most stocks from their pre-pandemic levels raise the prospects of a pullback in the market and/or modest returns for a longish period of time,’’ Kotak Securities said in a note.

Axis Securities, however, offered a bullish view. It said New Year would be a year of balance sheet leverage, led by a significant improvement in corporate profitability. The return of equity for the broader market is improving after a muted performance for several years.

“Overall, the Indian market has entered into an earning’s up-cycle with an expectation of more than 20 per cent growth in Nifty’s earnings in the next two years. With faster economic recovery on the cards, more cyclical sectors are likely to join the rally with the expectation of higher government spending moving forward,’’ the brokerage added.