On the eve of every new Samvat, lots of discussions take place about the market performance of the departing year and prospects for the new year. Actually, one year is too short a time span when seen from the perspective of the market. We know that wealth creation happens in the long run, spanning many years and, therefore, one-year performance is not very significant. However, the short-term trend may give many indications of which way the market is moving and is likely to move. More important, short-term trends will throw light on the changing sectoral prospects and the ongoing churns in the market. For a discerning investor, these trends will provide many takeaways, which can be used to formulate an optimal investment strategy.
The most significant lesson from Samvat 2081 is India’s huge underperformance. The one-year return from Nifty, as on 17th September, was a mere 3.75 percent. In sharp contrast, the one-year returns during this period from the MSCI World Index and MSCI EM Index were 17 percent and 23.3 percent, respectively. India has hugely underperformed.
The relative underperformance of India and the significant outperformance of other markets led to a momentum trade, where FIIs sold in India and bought in other performing markets on a sustained basis. The total FII selling through the exchanges in CY2024 was huge at Rs. 2,12,410 crore. This trend continues in CY2025; the total FII selling in 2025 up to 18th October stood at a massive Rs. 2,02,217 crore. The fundamental reason that triggered the FII selling was the sharp dip in earnings growth from 24 percent during FY21-24 to 5 percent in FY25. The pedestrian earnings growth in FY25 couldn’t justify the elevated valuations. The FII strategy of selling in expensive India and buying in cheaper markets with better earnings growth was a rational strategy, and it paid them rich dividends. An important lesson from India’s big underperformance is the need to diversify investment across geographies.
After India’s underperformance during the last one-year and the outperformance of other markets, the valuation differential between India and other markets has come down. And, FIIs have reduced their selling in India and have even turned buyers. Earnings growth is picking up in FY26 and will gather momentum in FY27. This augurs well for the market, going forward. Samvat 2082 will compensate for the poor performance of Samvat 2081.
Another important takeaway from the performance of Samvat 2081 is the significant sectoral trends happening in the market and indications of the likely evolution of these trends. Sectoral churns are normal. However, during the last one year, some global developments, particularly President Trump’s tariffs and new policy announcements relating to H1B visas, impacted externally oriented sectors like IT and to a lesser extent pharmaceuticals. Consequently, bluechips like TCS and Infosys were pushed to the group of the worst performing stocks of Samvat 2081. Sustained money flows into the market, particularly through SIPs, started chasing domestic consumption themes, which were unaffected by geopolitical headwinds and Trumpian tweets. Consequently, domestic consumption driven themes, and stocks like BEL, Bajaj Finance, Eicher, Interglobe, Maruti, Eternal, M&M etc. beat the benchmarks and outperformed, giving significant returns to investors in these stocks even in a poor performing market. Through Geojit Insight we had informed investors to focus on domestic-consumption themes in the context of the trade turbulence unleashed by President Trump. Samvat 2082 appears promising. The sectoral churns and prospects are explained in the accompanying article ‘Market message from megatrends.’
