Muhurat trading 2024 and Samvat 2081: 3 sectors stock market investors should watch out for

As we are about to enter Samvat 2081, here are the three key sectors stand out for their potential to drive market performance

India’s economy grew by 8.2% in FY24 and 6.4% in Q1 FY25, with a positive outlook supported by strong macroeconomic fundamentals. Despite a 7% market correction recently, the Nifty gained 26% during Samvat 2080 (November 14, 2023 – October 24, 2024). This growth was primarily driven by strong corporate earnings, political stability, and resilient domestic inflows, signalling sustained confidence in the market even amid short-term fluctuations. The outlook remains cautiously optimistic, with continued market performance expected to be robust in the upcoming period, says Gaurav Garg, Research Analyst at Lemonn Markets Desk.

The IT sector is emerging as a key area of interest, showcasing solid earnings performance and is one of the top sectors to watch out for. The Nifty IT index reported a year-on-year profit growth of 15.3%, aligning closely with expectations. Revenue growth also showed promise, rising 7.3% year-on-year, slightly surpassing forecasts, though the outlook remains cautiously optimistic, says Garg.
Notably, there are encouraging signs of a rebound in discretionary IT spending within the Banking, Financial Services, and Insurance (BFSI) sector, which is the largest contributor to IT revenue. Management teams’ express confidence in a strengthening deal pipeline and a reduction in uncertainty for the second half of FY25, particularly as the US Federal Reserve initiates a rate-cutting cycle following the upcoming elections, he adds.

Despite some setbacks in the Q2 FY25 earnings season, FMCG translates to a positive outlook. With around 67% of earnings reported in the Nifty FMCG segment, a 50-50 split between earnings misses and beats was observed, which is disappointing relative to initial expectations, says Garg. Several major players in the FMCG space have highlighted challenges such as slowing urban demand and rising raw material costs, which are pressuring margins. However, revenue growth remains robust, bolstered by a recovery in rural demand.
Looking ahead, a rebound in the second half of FY25 is anticipated, driven by the continued recovery in rural markets supported by a strong monsoon season, alongside expectations of stabilization in urban demand trends. The sector's inherent defensiveness during volatile periods positions it well, and any recent weaknesses in specific stocks seem to have already factored in many negative surprises.

The pharmaceutical sector is one of our top picks for the future, thanks to its strong earnings visibility and defensiveness in the face of market volatility. The robust Q1 earnings for FY25, combined with sector rotation and favourable conditions in US generic drug pricing, further bolster our optimistic outlook. These factors position the pharma sector as a compelling opportunity moving forward, he adds.