How investors can best pursue wealth in Vikram Samvat 2082

A corporate earnings revival urges us to stay invested in stocks and not be tempted by other dazzlers

- DEVINA MEHRA

Inthe 14 months I have been writing this column, I felt compelled to address current market conditions only once before. In ‘Stay put or exit? What should investors do in this market slump,’ (27 February 2025), I wrote, “In short, currently it is time to remain invested. All the data on compounding you see happens only if you remain invested” The Nifty closed February at a little above 22,100. It is up over 17% since then.

The new Samvat is as good a time as any to address the question of what to do now. First off, how is the market poised in terms of earnings and valuation fundamentals?

Consumption has been accelerating. Growth in private consumption across the Indian economy had reached a 21-year-low in 2023-24, when I was among the few pointing it out, because the stock market was still zooming. It’s only when the market started falling in September 2024 that talking heads on TV suddenly discovered a consumption slowdown. By this time, it had already begun to go up. Consumption has picked up both in urban and rural India, which is good news for most corporate earnings.

Another key factor has been the fall in consumer price inflation to historic lows. Not only has inflation dropped, the actual prices of some items have fallen too, especially in the food basket.

A year or two ago, high food prices were crowding out even everyday products like shampoo and soap from household budgets. Now there is significantly more room for spending, which is good news for corporate revenues.