DNA Money Edit: New Samvat a fountainhead of hope

Samvat 2073 has been a cracker of a year for stock investors. The rise in share prices in one year has added over Rs 25 lakh crore to investors' wealth. While the benchmark Sensex rose 16.6%, the broader NSE Nifty surged 18.2% during the year. The P/E multiple of the market is near record high and there have been concerns as the economic growth slipped into the slow lane in the first quarter.

The benchmark Nifty50 index is trading at over 24 times its trailing 12-months earnings per share, which is over four times the economic growth in terms of gross value added (GVA) of 5.6% during Q1. Analysts aver that this level has never been tested, not even during the bull market prior to 2008. They worry that the equity valuations may tumble if there isn't a quick revival in the economic growth.

Samvat 2074 that begins its journey today is a fountainhead of hope. After the initial brouhaha following the rollout of GST, things are slowly and steadily falling in place. The Reserve Bank of India (RBI) may weigh options to cut the repo rate and step up the economic activity in the second half of the current fiscal. After giving 6.5-9% returns in Samvat 2073, the outlook of debt as an asset class continues to be dependent on the inflation outlook.