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"From last Diwali till date the Nifty is up around 42 percent. Abundant liquidity, low-interest rate, good performance of the corporate sector almost unaffected by the pandemic and, perhaps more importantly, the 'retail stock rush' are the factors that have lifted the market sentiment. The fundamental support to the market rally has been from the steadily improving corporate results which indicate a sharp turnaround in India Inc's performance, which in turn, has been aided by the cut in corporate tax and a steep decline in interest rate. 

The notable feature of this bull rally, which has not seen a major correction so far, is the exuberant participation of retail investors. The total Demat accounts in India has now crossed 6 crores with 1.42 cr getting added in FY21 alone. Retail investors now account for 45 percent of cash market transactions and retail is enthusiastically buying everything that FIIs are selling. This is evident from the fact that big FII selling of Rs 11308 cr in July and 13550 cr in October didn't impact the market. In brief, retail investors are the dominant players in the market now. We don't know how long this will last since valuations are stretched and many foreign brokerages have downgraded India on excessive valuations. 

Investors should expect only modest returns for the coming Samvat. It would be safe to remain invested in high-quality stocks in performing sectors like private sector banking; leading names in the mortgage, fintech and financial services; IT and construction-related segments"

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