As Samvat 2073 winds to a close, brokerages see a variety of consumption-driven stocks doing well in Samvat 2074. But their outlook for the new year is mixed when it comes to the market’s overall performance till the next Diwali.

Auto, auto ancillaries, mid-sized banks, media and cement stocks crowd the list of Diwali top picks of brokerages.

Few brokerages have picked IT, infrastructure and pharma stocks given the sectors’ troubled past and mediocre to weaker outlook.

The outlook for Samvat 2074 is not as bright as Samvat 2073, when equities gave superior return compared to other asset classes. However, brokerages expect rural demand to be strong on good monsoon rains and good demand for consumer discretionary goods.

Kotak Securities in its outlook for Samvat 2074 said, "We expect returns in Samvat 2074 to moderate in view of weak near-term earnings growth and higher than average valuations.

“The up-move in Indian equities have been supported by strong macro-economic factors  like GDP growth, reducing current account deficit and benign inflation etc. However, there has been some deterioration on these counts in recent times. Inflation concerns have resurfaced as reflected by the RBI guv’s take on monetary policy stance. Plus, earnings growth in FY18 is likely to be subdued. In our view, further upsides from the current levels would be contingent on revival of earnings growth and resolution of stressed banking assets," Kotak Securities said.

For Samvat 2074, Sharekhan top Diwali picks are largely from key investment themes; namely financialisation of household savings, increased government spending on infrastructure development in the absence of private investments and benefits accruing to consumption companies, from a shift in the market share to organised companies from unorganised ones.

HDFC Securities, in its market outlook for 2017, said, “Though we believe Indian equities are in a bull market, a combination of different valuation methodologies such as forward P/E, market cap to GDP, and the spread between bond yields and earnings yields do not indicate we are at the peak of a bull market.”

“While the Nifty could correct sharply in the early part of the coming Samwat, it could later revisit the highs and attempt to breach them. Auto and Metals could continue to do well, Realty could be a dark horse, while Healthcare could make a comeback in the coming Samwat,” HDFC Securities said.

Axis Direct, in its market outlook for Samvat 2074, said, “Another good monsoon after two consecutive good monsoons in 2016 and 2017 would do wonders for the rural economy. We prefer the rural consumption theme which includes discretionary segment viz. automobile and packaging. Election fever in 2018 and 2019 would benefit media segment largely and print media in particular.”