A Bad January Doesn’t Mean a Lost Year for Indian Stocks

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(Bloomberg) — Before the trading day begins, we bring you a roundup of important news and events that are likely to shake up the markets. Today we look at:

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• Little January
• Dangers of passing ownership
• Love of stock trading

Hello, this is Chiranjivi Chakraborty, a financial reporter in Mumbai. While most Asian stocks were found in light trade, with several regional markets still closed for holidays, Indian traders are likely to face a muted start. With one eye on 2025 and many foreign investors on vacation, the bulls and bears are likely to stop betting.

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A bad start is not part of a losing battle in stocks

A weak start to the year may not bode well for the Indian stock market. The Nifty has started each calendar year with monthly losses for the past six years, only to post strong gains at the end of the year. The season suggests that traders should prepare for a muted January, with an average loss of more than 1%, based on the past two decades. Expect sharp volatility as investors navigate US President-elect Donald Trump’s trade policies, extended ratings on Indian stocks, a faltering economy, and strong domestic currencies.

Commodities, defensive stocks: the risks of crowded trading

Real estate and defense are two industries that have no shortage of cheerleaders among analysts. The fundamentals of both appear strong at the moment: domestic manufacturing is driving defense growth, while strong demand for housing and office space is fueling optimism for property development. However, gauges in both sectors have been struggling since June. Traders suggest that one of the reasons could be that many people have already invested in these sectors, making it difficult to attract new believers. This trend has been playing in the chemical sector for more than three years.

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Families go completely into stocks

The belief that Indian households have low exposure to equities may no longer hold water. Emkay Global reports that one in three rupees of domestic wealth is now in the stock market, directly or indirectly. Bulls see this as a sign of market resilience – proof that the market can handle any challenge 2025 may bring. But critics warn that it could result if corporate earnings fall. Nevertheless, Emkay predicts the growth of household incomes in 2030, supporting a multi-year rally in the market already in its ninth year of gains.

Analyst actions:

• Bharat Electronics Rated New Buy by Phillip Secs; PT 390 rupees
• Sagility India Rated New Overweight at JPMorgan; PT 54
• MAS Fin Rated New Buy at Anand Rathi Securities; PT 365 rupees

Three good lessons from Bloomberg today:

• Ola Electric Adds 3,200 Stores, Seeks to Eliminate Past Consumer Issues
• Russia Attacks Ukraine Energy Network in Christmas Attack
• The Big Take: Japan’s Insurance Scandal Happened Inside Karaoke Bars

And, finally..

The market finally took a much needed breather in the last two sessions. While it’s no surprise that volatility tends to cool at this time of year, what stands out is the sharp drop in India’s NSE Volatility Index – also known as the fear index – especially after a tough week when it fell by around 5%. The reduction in volatility is accompanied by negation: for the past decade, the India VIX has been rising in January. So, you might want to hold on to your horses – or reindeer – for now.

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—With help from Kartik Goyal, Savio Shetty and Ashutosh Joshi.

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