Returns across debt, equity and gold to converge to a narrow range in Samvat 2081: Nilesh Shah

With Nifty declining 6.5% so far in the festive month of October amid heavy outflow from FIIs and a weak Q2 earnings season, Dalal Street’s star investor Nilesh Shah on Friday warned investors that returns across debt, equity and gold will converge to a narrow range in Samvat 2081.

“Last year was an exceptional year where equity, debt, and gold delivered very good returns. The small and midcap despite recent corrections has done extremely well.

While our long-term growth story is intact, green shoots on consumption, as well as private investment, are not sustaining.


Stating that investors will have to moderate return expectations significantly, he said the key mantra for the new Hindu calendar year would be Quality over Momentum, reasonable valuations over expensive valuations and moderate return expectations with a focus on asset allocation.

“While our long-term growth story is intact, green shoots on consumption as well as private investment is not sustaining. We expect returns across debt equity and gold to converge to a narrow range. Investors will have to moderate return expectations significantly. Quality over Momentum, reasonable valuations over expensive valuations, and moderate return expectations with a focus on asset allocation will be the key mantra for this samvat 2081,” he said.

Historically, since 2014, Nifty has posted negative returns only four times in the month before Diwali, with an average return of 0.84%. The worst pre-Diwali period until now was in 2015, with a 4.45% drop. This year's fall is on track to surpass that record, having already decreased by more than 6%.

FIIs have pulled out Rs 86,000 crore from the market amid a shift towards China, concerns around elevated valuations in India, and a weak earnings outlook, DIIs have poured in Rs 93,000 crore.

The value of gold has seen a notable increase of about 28% between January and October this year. This rise in gold prices has outpaced some major stock market indices.

In July, gold and silver prices corrected sharply by 7% in the local markets after the government slashed basic customs duty on gold and other metals.